Commission Cuts Effective January 2010?

[nolaagent]

With the imposed MLRs, paying us a % of premium makes little sense now and will make less sense in the future. The reality is that the cost/rewards associated with making a sale do not relate to the premiums paid by the consumer.

The largest driver of health insurance premiums is the cost of medical care and these costs increase faster than inflation (and aren't addressed by ObamaCare). It's common for medical costs to increase at twice the rate of rent, supplies, phones, and other costs of running an agency.

In this post reform environment, linking our pay increases to rising medical costs is an illogical practice. Instead of commissions, we are most likely to receive a flat fee per month per member (but it will be independent of the underlying premium).

 

[TXINSURANCE]

In this post reform environment, linking our pay increases to rising medical costs is an illogical practice. Instead of commissions, we are most likely to receive a flat fee per month per member (but it will be independent of the underlying premium).

Agreed.

But likely not pre 2014.

 

[retread]

What some of you guys are missing is the current MLRs are fudged to begin with. Carriers have not been showing wellness programs or high tech services in their MLR but instead under Admin costs in order to beef up their financials to Wall Street. It will be in their favor to now include them in their MLR, so not much will change but the numbers.

What is that saying? "Statistics don't lie, but liars use statistics"?

 

[nolaagent]

@retread

HHS/NAIC will be watching the carriers like a hawk and won't let the carriers shift some of their health services costs from admin to medical. WellPoint is already trying this. They won't allow this in the Obamacare MLR formula

@TX

I'm hearing the majors will change to fixed fee pmpm in 4th Qth 2010

 

[TXINSURANCE]

@TX

I'm hearing the majors will change to fixed fee pmpm in 4th Qth 2010

I don't see that happening. I see massive cuts in the 4 to 8% range on future and in some cases existing business 10/1/10 and beyond. A lot depends on the HHS and MLR formula - see my other thread.

 

[Crabcake Johnny]

I disagree TX. I don't think we'll see any comp changed until the exchanges in 2014.

 

[nolaagent]

The commission compression (reduced POP or flat fee pmpm)has to start in Q4 2010 if the mandated MLR of 80% goes into effect 1/1/2011.

It will be intersting to see which carrier pulls the trigger first. My bet would be it will be the Blues since they have the highest brand awareness and can still pull in applicants with reduced agent comp (and using alternative distribution...direct response, in-house agent, online, etc). Once Big Blue starts, all the carriers will follow suit.

 

[somarco]

The commission compression (reduced POP or flat fee pmpm)has to start in Q4 2010 if the mandated MLR of 80% goes into effect 1/1/2011.

What is the basis for your argument? Obviously I disagree, so I would be curious how you will justify your statement. Just a hunch, or are you tapped in to the actuaries minds?

As to your second comment, only a handful of carriers have the ability to pull off DTC solicitation. Certainly Blue is one of them, but even with their presence they still get 60%+ of production from brokers in GA. It may be different in your state.

Humana probably does a better job of writing business direct than most of the other carriers but roughly 80 - 85% of their business is broker directed.

Everyone else get's less than 10% direct.

Even with "standardized" plans and a TBA Exchange, most buyers will purchase through an agent.

 

[TXINSURANCE]

John - sorry I wish you were correct. I have to disagree about comp not changing pre 2014.

Unless the mlr changes drastically I have confirmation from almost every carrier comp is going down. In some cases on your existing book.

Not one call was a per member fee mentioned. Just sub 10% comp. was mentioned on every call.

Sorry!

 

[Crabcake Johnny]

Sub 10% with full underwriting and more expensive plans (to comply with the legislation) would be interesting. I'd likely be the only health insurance agent in MD...which wouldn't necessarily be a bad thing.