Agent's Role in the Exchanges

[insurehound]

I have read the NAHU's interpretation of HC reform. Much said about the exchanges. Of course I still wonder what the agent's role in the exchanges will be. Glorified application-taker who is paid $5 an application?

And what about selling OUTSIDE of the exchange? Will that be even possible? It seems to me that if you sneeze, that will mean that you will lose your private coverage and have to buy through the exchange.

To top it off, we are NOT the insurance company's friend. Anything they can do to get us out of the picture will be done.

 

[CHUMPS FROM OXFORD]

We'll make money, but less. There will be a market that buys outside the exchange (cat-high ded.).

 

[Dave020]

There were once two small group exchanges in California (now just one private exchange). HIPC (Health Insurance Plan of California--became PacAdvantage) and California Choice.

Originally, under HIPC, no commission was factored in but the client could agree to an agent commission on HIPC enrollments on top. Something like 80% paid commission to have an agent. Eventually HIPC/PacAdvantage built agent commissions into the premium pricing. It was somewhere between 7-10%.

California Choice (CalChoice) also includes agent commission around 7%. A sister company, KPChoice, was paying 7% on KP plans while KP direct went to a per head flat fee. Agents started selling exclusive KPChoice and KP switched back to 7% direct commission to compete with Choice.

Since the exchanges will be state-run, it will be up to each state and carriers in the pool to determine appropriate compensation levels for agents.

The only pooled program in California that currently pays a flat fee per enrollment is MRMIP. Technically a risk pool and not an exchange. $50 per enrollment.

 

[insurehound]

Dave, you are a wealth of knowledge and I appreciate your insight.

 

[Dave020]

You have to watch the carriers here. Some interesting happenings lately that indicate track record.

When PacAdvantage (CA state exchange) collapsed a few year ago it was because Blue Shield CA brought in rates too high (or refused to sell at the lower "exchange" rates). At that time Health Net was #2 carrier in the exchange and could not run it without bigger Blue, so they both bailed and it collapsed. At that time, the Anthem/Wellpoint merger was not complete and BC CA had no interest in exchanges or pooled plans.

FF to 2009 - October Blue Shield brings rates to MRMIP that are excessive and MRMIP terminates Blue Shield from the MRMIP program (leaving only Anthem BC, Kaiser and Contra Costa Health (regional)).

FF to 2010 - California Choice Exchange (private) received rates from Blue Shield considered "excessive" for the exchange. Blue Shield is gone and replaced by Anthem Blue Cross effective 6/1/10.

So, Blue Shield killed HIPC/PacAdvantage, got tossed from the state risk pool (MRMIP) and was thrown out of CalChoice exchange.

In the latter cases, Anthem stayed in or came in to be the big Blue carrier. I suspect, had the merger occurred before PacAdvantage collapsed, Anthem (who seems to be fine with both exchanges and ASO self-funded services on large group) would have bailed out the state exchange and kept it going. We'd still have HIPC.

Remember this when 2014 comes and you are looking for which carriers to make your "A" list carriers in CA.

 

[insurehound]

Dave, I don't know, do we really know if we will be paid in the exchanges? I was reading an article in AARP saying that the exchanges will be like buying travel. If the person/group can buy online, won't the insurance companies screw us out of being in the equation? Or find a way to just pay us per application? Who is in charge of making these decisions and who will fight for us?

 

[Dave020]

It's hard to say at this point what compensation might be from selling exchange policies. IF agents can even sell exchange policies.

NAHU is the organization who fights for us.

 

[Winter_123]

Since the exchanges will be state-run, it will be up to each state and carriers in the pool to determine appropriate compensation levels for agents.

That's a piece of the picture but the feds will continue to keep setting and jacking up the MLR requirements (as some states have already done). The more they squeeze the margin the carriers have to work with then the more that becomes the controlling factor. Even if a state got silly and allowed a reasonable commission, will the carriers have the margin or the will to offer it .

Similarly in regard to Chumps' comment that there will always be some who want high deduct or catastrophic and will want to go outside the exchange. That might be but the feds have a whole arsenal of tools to make you want to buy one of their creditable plans. Penalties for not doing so will be there, and consumers will think "gee if I get one of the ecchange plans I can get a tax credit or subsidy and have a lower deductible plan for the same as a high deductible plan. We can have a theoretical argument about how some people will still want to go outside of that scheme, but the feds will control where the major market is. Health insurance is a government run utility now. There will undoubtedly be some customers who want to go off the grid but, again, the government controls where the market is and will be.

No, the elections in November are not gong to unwind all that. From here on out, we just stumble from one crisis to the next because nothing has been done about cost containment. And of course crisis is Obama's ticket to single payer. We are right on schedule.

Change you can believe in.

 

[insurehound]

This is not looking good...the insurance industry's dream come true. Get rid of the agent AND get a bigger piece of the market (all those new people enrolling).

Of course any gain made by the insurance industry will be pocketed by the execs and eventually, the insurance companies will be out of business as they won't be able to take all the risk. You watch.

Then, the government will step in and say "See? We told you so. Those evil insurance companies are greedy and now we need to take over the whole industry."

Then a couple of the big insurance companies will take over as the administrators of any govt plan and make money again without any of the risk.

...and I was just getting good at Small Group.

 

[insurehound]

Al, I can't believe I'm going to say this but I agree with you.