About a month ago, we were informed that United Healthcare, the largest insurance carrier in the Medicare field, could no longer pay agent commissions on new sales for their Medicare Advantage plans, at least in much of the country.
Two days ago, I attended a meeting for another one of the major insurance carriers and was presented with information on a decent Medicare option for the Nebraska and Iowa market that I primarily serve. At that time, it seemed that at least United Healthcare's competition was intending to use agents to help grow their market share.
Today, that company did a 180 and pulled all commissions (on new business) for that plan. Essentially, they are suggesting, their plan may now be too good and result in nonprofitability, and it's too late to change the plan, just two weeks before the start of the Medicare annual enrollment period. So, they cut out agents and their commissions.
When they detail to us how the Inflation Reduction Act and its $2,000 cap on drug out-of-pocket ($2,100 for 2026) has severely hampered their profitability to create, administer and pay claims on Medicare Advantage plans, as they have successfully for years, I tend to believe them.
I see three scenarios going forward:
1. The Medicare Advantage plans find a way to right their ship, through some combination of attrition in unprofitable markets, additional funding from Congress or a significant reduction in the ancillary benefits their members have come to love.
2. The plans are unable to right their ship, and Medicare Advantage dies a sudden death. Millions struggle with the fallout and further chaos. Would the Centers for Medicare and Medicaid Services (the agency that runs Medicare) and Congress actually allow that to happen? And, if they abandon coverage areas, the ripple effect of millions of Medicare beneficiaries being guaranteed Medicare supplements without underwriting will also be an actuarial nightmare.
3. The carriers do right their ship but find it significantly helps their bottom line to cease paying agents in perpetuity. And grow accustomed to jettisoning that expense of those darn agent commissions and eventually develop AI tools in an attempt to pretend agents are unnecessary and never existed.
Good poker players look for the "tell." That's a way to ascertain clues about another player's hand without cheating or peeking.
The "tell" from the Medicare Advantage insurers will be if they cut commissions while simultaneously advertising the same plans on TV. While their financial constraints may be real, emphasizing the constraints may well also be a ruse to use that public rationale of "poverty" as a cover story for eliminating loyal agents entirely.
Frank Adkisson is the principal at National Senior Insurance in Omaha, Nebraska.
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