John Sarich says he is starting to think more these days about what might replace the Affordable Care Act (ACA) public health insurance exchange system.
Sarich, vice president of strategy at VUE Software, a Coconut Creek, Fla.-based insurance distributor management software company, prefers ACA replacer proposals based on health savings accounts and similar types of personal health accounts.
But, in connection with his role at VUE, he tries to look at U.S. insurance market trends as coolly as he can.
In May 2013, when even most exchange observers who hated the ACA were assuming that the U.S. Department of Health and Human Services and state-based exchange programs could get health insurance sales websites up and running in time for the open enrollment period for 2014, Sarich warned the exchange builders were already close to blowing through their integration and deadlines.
In November, Sarich predicted that, whatever health insurers happen to dislike about ACA effects on the commercial health insurance market, they are more likely to push for a replacement that resembles the Medicare Advantage system — with private insurers providing administrative services and assuming a modest amount of claim risk for a government program — than to push for a system with less government involvement.
Now, Sarich said, he believes he’s seeing the end of insurer interest in this version of ACA World.
“They don’t see the long-term future of it,” Sarich.
Many of the surviving state-based exchanges “are basically now starved for money,” Sarich said. “Most of them are on their last legs. The program never really went anywhere. It was designed to be a media blitz.”
For a look at some other things Sarich said, read on:
1. The private exchanges he works with seem to be doing well.
Some ACA exchange boards are secretive, but others post large amounts of performance data.
Few private exchange managers post much information about the performance of their operations.
Some have speculated that private exchanges might be suffering at least as many technical and management problems as the ACA exchanges. Some survey reports have suggested that employer interest in private exchanges as a defense against rising health benefits costs might be dropping.
Sarich said he has worked with a few private exchanges and believes they’re doing well.
At the exchange operated by London-based Aon plc, for example, agents and brokers are welcome, and producers can help clients choose from a menu of 50 to 60 carriers, Sarich said.
The agents using the system “are very happy,” Sarich said. “They get paid. That seems to be working.”
Sarich said one thing the ACA exchanges, and the early private exchanges, have done is shown insurers and others that there is money to be made in the health insurance exchange business, if the exchange managers do things the right way.
2. He thinks the dollar value of health agent compensation per sale may be holding steady in the off-exchange market.
Sarich said he believes the recent announcements about individual health agent commission cuts have been about problems with ACA exchange administration and risk problems, not about insurers pushing producers out of the U.S. health insurance system.
Few issuers really want any more exchange business, Sarich said.
Many of the agents who are still in the game are moving to fee-based practices, Sarich said.
Outside of the ACA exchange system, when insurers are paying commissions, the commissions may be falling as a percentage of premiums, but, for the most part, he said, he believes the dollar amounts producers are getting per policy sold are comparable to what they were several years ago.
3. He thinks private exchange systems may be helping insurers pay health agents faster.
Sarich said one advantage of moving to a health insurance distribution system based on private exchange programs is that exchange systems can set up agent onboarding and compensation systems that speed up the compensation payment process.
One insurer that tried a private exchange found it could pay commissions to 300 agents almost instantaneously, Sarich said.
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