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.