Back in 2013, Janet Trautwein, CEO of the National Association of Health Underwriters offered a prophetic remark: “Without agents’ expert advice, many individuals and businesses will end up spending more for health insurance and receive less care.”
While the Affordable Care Act (ACA) has made significant strides in reducing the uninsured population from 16.2 percent in 2013 to 10.5 percent in 2015, for some who now have coverage it has become increasingly difficult to afford using their insurance. Many are skipping filling prescriptions or even dropping coverage altogether.
In fact, about 20 percent of the insured population has trouble paying medical bills. In a recent joint study conducted by the Kaiser Family Foundation and the New York Times, data shows that of those having trouble, three quarters cite out-of-pocket expenses such as copays, deductibles and coinsurance as being more than they could afford. The impact of this cannot be overstated. As a direct result, families are putting off major purchases and vacations, reducing overall household spending, depleting savings, taking extra jobs and borrowing from lenders (and friends).
This is not the end game envisioned by supporters of the ACA or those seeking a better health care system through alternate policy positions.
A new start
We are in the midst of an administration change, and the future of the Affordable Care Act (or whatever comes after it) will depend on solutions that will help America address its health care challenges.
Health care experts and politicians are vigorously discussing the need to rein in the rising cost of health care. Their ideas include creating new tax credit arrangements, filling coverage gaps, expanding health savings accounts, reducing drug costs and boosting access to mental health services. It is indeed important that experts take a hard look at these and other ideas that have the potential to help everyday consumers better meet their health care needs.
So far, the Affordable Care Act has helped stem rising premiums and overall health care costs in the initial years of implementation, with an average increase of just 3.6 percent before the tax credit, according to Kaiser data. Now, policymakers are zeroing in on out-of-pocket expenses not covered by health insurance.
This is a natural reaction because deductibles are rising faster than wages, but an analysis of internal data from my company, HealthMarkets, reveals there is more to the story. Indeed, there is another tactic to address rising costs and it’s dependent on human engagement on both sides of the deal: Whether an individual speaks with an agent in person or over the phone, the data show that a consumer who speaks to an agent pays less per month than those who shop online and do not engage with a licensed professional.
One argument insurers have made for cutting agent commissions is that the cuts create a trickle-down effect, which leads to savings for consumers.
Couple that with the myth of “agent fees” and it’s an easy, headline-friendly argument to make.
The argument has no basis in fact.
First, consumers do not pay a fee for an agent’s services.
Second, on average, at all coverage levels (e.g., bronze, silver, gold and platinum), customers who purchased family plans online paid more per month for their net premium. For instance, when shopping for a family silver plan (the most commonly purchased type), online shoppers paid an average net monthly premium of $330. This compares with $255 for consumers who purchased from a telesales agent. Not only that, shoppers who purchased a platinum plan through a telesales agent paid less than those buying gold plans online, thus receiving better coverage for their families, for less.
For consumers looking for a single-person silver plan, online shoppers paid almost 13 percent more than those who shopped with an agent by phone or face-to-face.
HealthCare.gov is not Amazon
Should anyone really be surprised by how much shopping for health coverage without the help of an agent often costs?
Absolutely not. It’s like people trying their own legal cases instead of hiring lawyers. Licensed health insurance agents help consumers navigate the intricacies of health insurance to get the right coverage for their needs at a price that fits their budget.
Unfortunately, too much fanfare, advertising and press have pushed people toward the online government health exchanges to shop for coverage without the proper level of guidance and advice. It’s convenient to think of the marketplace as being just that turnkey. But in practice, shopping for insurance is not the same as shopping for something on Amazon.
More specifically, leaving it up to a website is not always the best idea, especially when there is a mad rush to get signed up by the Dec. 15 deadline for coverage effective on Jan. 1. An agent can help with navigating options thoughtfully when there is little time — and pressure to enroll to avoid a tax penalty.
All of this is to say that in a pinch, enrolling without the aid of a professional is better than not enrolling at all. But the value licensed professionals bring to the process is quantifiable.
Some will claim there is in fact sufficient government exchange support in the form of “navigators” charged with helping consumers enroll through the website, but the reality is they are ill-equipped to adequately help.
Unlike insurance agents, navigators do not complete licensure examinations to demonstrate expertise and, more importantly, cannot recommend plans based on individual health care needs and budgets. They also don’t have access to any plans outside of the marketplace that can help individuals better manage their health insurance costs. Their primary purpose is to help individuals enroll through the website, not to provide guidance on finding the right coverage.
Even Congress, through its “Access to Independent Health Insurance Advisors Act,” shows support for the notion that licensed agents play a pivotal role in keeping health insurance affordable. The recent piece of bipartisan legislation would preserve access to licensed independent insurance producers.
After Jan. 31
During open enrollment, we encourage consumers to consider working with a licensed agent to help maximize the value of their purchase. Whether the shopper is a first-time buyer or an experienced health insurance consumer, the process can be confusing — sometimes even a bit overwhelming. Chances are consumers will need some assistance to guide them through the options, help them determine subsidy eligibility and get enrolled in the right plan.
After all, the choices a family makes when it comes to health care are among its most important. Marginalizing that by suggesting that enrolling without the help of a licensed professional yields the same benefits as doing so with an agent’s help does the customer and the industry a tremendous disservice. To that end, it is our belief that these professionals should be recognized as the invaluable resource they are and compensated as such.
David B. Peterson is the senior director of marketing and strategy at HealthMarkets Inc., an independent health insurance agency based in North Richland Hills, Texas.
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