The rules around health insurance exchanges are dynamic and evolve all the time. Some agents fear that these exchanges could displace us, just as Travelocity displaced many travel agents. Others argue that because health insurance is a much more complicated purchase than a plane ticket, and because these new channels are likely to confuse consumers, our expertise and advice will be even more crucial.
Hopefully the role of the agents will become clearer as time goes on. In the meantime, here’s an overview of what we do and don’t know about health insurance exchanges.
Health Insurance Exchange: A Definition
A health insurance exchange is an online marketplace where individuals and small businesses can search, compare, and buy health insurance. Think of it like Expedia or Travelocity for health insurance. No one is required to use an exchange; it is an additional channel that is added to the market.
Some states, including Colorado, where Alliance Insurance Group is based, are taking the lead in creating their own exchanges, which are permitted by federal law but subject to certain guidelines. States that choose not to create their own exchanges by 2014 must use the federal exchange.
States that build their own exchanges often cite a desire to control their own destiny and tailor their exchange to the needs of the local population. States that have rejected the swap proposals often cite their reluctance to support any aspect of the federal reform bill, which they hope will be struck down by the Supreme Court.
In general, insurance exchanges allow consumers and small businesses to:
- Shop and compare health plans, which must include certain standardized benefits.
- Determine eligibility for premium relief in the form of tax credits.
- Call or sit down with someone who can explain various benefits and features of the plan.
- Sign up for a plan.
Below are some of the most relevant aspects of health insurance exchanges for independent insurance agents.
Consumer access to agents
The National Association of Health Insurers (NAHU) is pushing for an agent contact option to be included within the exchanges’ online systems. This could be structured similarly to the National Home Sales Web Portal, which presents listing information in a standardized format, but also connects potential homebuyers with a state-licensed real estate agent.
Importance of Certification
NAHU also believes that all agents participating in the exchanges must pass an annual exam that addresses private coverage, public assistance, and subsidy-eligible options to ensure familiarity with all coverage options available to consumers. This knowledge is important to both agents and individuals filling the new role of “care navigator.” Navigators will receive federal funds to help educate the public, distribute enrollment information and premium credits, and provide enrollment assistance. NAHU believes that boaters duplicate the role of authorized agents and questions the wisdom of spending federal money on these positions. But if browsers are used, they must be subject to the same rigorous licensing and continuing education requirements as agents.
Marketing limits and commissions
There has been talk of restricting broker marketing activities and fees related to their activity within exchanges, which NAHU strongly opposes. The reason is that the above for such restrictions, Medicare Advantage, does not apply here at all. For the under-65 and small business health insurance markets, potential customers often want agents to provide additional information about life, dental, disability, and other elements of the typical employee benefits package, within a single meeting. .
Regarding commissions, we believe that these should be determined by private health insurers, as they are today. That being said, health plans have already begun cutting fees in response to other aspects of health care reform, such as administrative vs. medical loss ratio requirements. The best insulation from commission cuts is to join forces with a General Management Agency (MGA) that can consolidate the sales activity of many agents, guaranteeing insurers a high volume of business.
Will the exchanges really help?
It’s safe to say that “the jury is out” on this matter.
Will exchanges reduce premiums? The answer largely depends on how the risk groups are structured. Some argue that separate groups for individuals vs. small businesses are fairer, as premiums more accurately reflect the risks of these two very different markets. Others say that combining the pools would allow risk to be spread across a larger base, facilitating lower prices for everyone.
Will the exchanges improve the general health of the population? The hope is that, among other things, costly ER visits will decrease once a larger percentage of citizens are covered. Others counter that those with low-benefit/high-deductible plans are also reluctant to seek preventative or even acute care until absolutely necessary. Will exchanges improve the healthcare shopping experience? Possibly. In theory, aligning benefits “apples to apples” should make shopping easier, as long as it doesn’t result in a plethora of indistinguishable and similar plans blurring and further confusing the consumer.
Like many facets of health care reform, we as agents may need to embrace change and adapt as best we can to the changing landscape. Unity is strength: Through your local professional organization and a good MGA who has helped you with your insurance agency business plan, you can navigate these changes with as much grace and insight as possible.
