Health Care Reform and Agents
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There are so many flaws in these proposals it is hard to know where to start. But since you mentioned LR's, let's use that.
Congress is attempting to squeeze the carriers on all sides. You must cover this, your rates must be no higher than that and you must pay out at least 80 - 85% of premiums collected.
Too bad Congress doesn't have to follow their own formula.
Health insurance reform virtually guarantee's a collapse of the current funding model for all health insurance, not just individual plans (although they are affected more adversely than group). There is almost no margin of error and no guarantee the carriers will at least break even.
Nothing in the proposals addresses reserves which are mandated by statute. Reserves come from (in effect) overcharging on the premium side to build up a fund to cover IBNR claims. If the proposals do not account for reserves the carriers are toast, with or without the agent.
That is, if they choose to participate in this cluster frick from the get go.
Most carriers will not have the ability to ante up and get in the game so there will be fewer carriers. If they (by design or otherwise) cut commissions too much they lose the agent driven business which will drive up their acquisition costs even higher.
For all the complaints about the current system it actually works pretty well for 95% of the population. Compare that to Medicare & Medicaid, both of which are on life support and the private pay system runs like a charm.
It will be interesting to see what, if anything, finally happens with "reform", but one thing is certain. What Washington has already done to sink GM (beyond what they did to themselves) is nothing compared to what they have done to the insurance industry and the overall economy.
Congress is attempting to squeeze the carriers on all sides. You must cover this, your rates must be no higher than that and you must pay out at least 80 - 85% of premiums collected.
Too bad Congress doesn't have to follow their own formula.
Health insurance reform virtually guarantee's a collapse of the current funding model for all health insurance, not just individual plans (although they are affected more adversely than group). There is almost no margin of error and no guarantee the carriers will at least break even.
Nothing in the proposals addresses reserves which are mandated by statute. Reserves come from (in effect) overcharging on the premium side to build up a fund to cover IBNR claims. If the proposals do not account for reserves the carriers are toast, with or without the agent.
That is, if they choose to participate in this cluster frick from the get go.
Most carriers will not have the ability to ante up and get in the game so there will be fewer carriers. If they (by design or otherwise) cut commissions too much they lose the agent driven business which will drive up their acquisition costs even higher.
For all the complaints about the current system it actually works pretty well for 95% of the population. Compare that to Medicare & Medicaid, both of which are on life support and the private pay system runs like a charm.
It will be interesting to see what, if anything, finally happens with "reform", but one thing is certain. What Washington has already done to sink GM (beyond what they did to themselves) is nothing compared to what they have done to the insurance industry and the overall economy.
Now I have something interesting to read. The Congress is trying to be flexible and pressing the carriers.
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