What will happen to health insurance brokers?
A common question during the transitional time of the Affordable Care Act, from 2010-2014, more control over health insurance trickled in from the government. January 1, 2014 sounded much like the end of the world to many who sold individual policies: the day when the health care law directly competes with individual health market, but ultimately became favorable.
The whole concept of participating in a government-run program without being able to increase policyholder’s rates, left many agents (not ours, of course) wondering what was to come on the next leg of health reform changes.
On top of state health exchanges, there are many other pieces of the Affordable Care Act that have affected the private market. Over the past few years, many agents have jumped ship from the business altogether as they were affected by the MLR. Experiencing commission cuts, sometimes job cuts, has been common since the beginning of 2011. Other brokers have not suffered so harshly and are still working hard in spite of the changes.
Upon the advent of health reform, this question began to concern agents of individual health insurance policies, but now as the law is in place, a change of heart is occurring. Everyone is required to buy health insurance, and most will only be able to afford a government plan, so a new door has opened — not closed — for agents.
Large insurance carriers merged in order to offer more Medicare and Medicaid plans, and plenty are offering coverage on the health insurance marketplace in order to follow the course of coverage. Consumers may decide to trust the long established private market over state exchanges, while many others cannot afford to be picky. Either way, health insurance agents and brokers are free to sell plans on the individual market, regardless of government involvement.
Health insurance brokers will certainly not go extinct after all, as every individual is required to buy insurance — and even with the introduction of navigators and certified application counselors, there is no threat of losing work. Those who work for the exchange are not able to sell anyone a plan, or suggest which policy they choose under federal law, leaving such responsibilities to licensed agents.
Those who qualify for Medicaid, even under expansion, would still not be able to afford a private plan regardless, and the solution for those who are poor with an income above the acceptable level for Medicaid are going to receive subsidies so they can buy a private plan. There is also talk of whether or not there will be sufficient funding for the million of people who fall into this income level to all receive subsidies. If the funds for getting these individuals and families covered is nonexistent, then the number of insured individuals would decrease.
Still, since the numbers have only been projected and not yet revealed, speculation can only be made as to what will happen in the future. If there is adequate funding for subsidies, then the private market should flood with new business, hoping that individuals will feel more comfortable going to an established health insurance system instead of a brand new one.
The Downside: MLR
In the beginning of 2011, the Medical Loss Ratio resulted in a huge budget reorganization for every private insurer. This resulted in lay-offs, many brokers quitting the business altogether, and commission cuts – as bonuses and salaries for workers were viewed an unnecessary expense. Compared to administering quality care for policyholders, agent reimbursement was secondary. Not considering putting people out of work or not being paid sufficiently was obviously not of importance. This article further explains details of the effect of the MLR on commissions.
Several organizations are currently fighting to get Congress to acknowledge that commission elimination is detrimental to health insurance, and get it exempt from the MLR. There may be hope in these bills for agents in coming years, hoping they get acknowledged soon and passed. Supporting the passing of these bills may be the most productive way to go for some agents, while others may find a more immediate solution in selling another type of insurance.
Another unpleasant fact of the matter is that CEOs of many national and regional carriers have received salary increases since the implementation of the MLR. It looks like the elimination of the middle class game continues in this circumstance, especially if you are working for a carrier. Independent brokers for general agencies are getting it a little bit easier in some cases, as they can offer multiple companies and rules are slightly different.
Merging companies = less to sell? As several large companies merged during the ACA’s transitional period, there was a fear of streamlining products and not having a large variety of plan to choose from. However, there is now an even broader selection of plans under the ACA, between plans on and off the exchange. Obamacare makes it easier to shop for coverage, since you’ll know what plans offer, but not all plans are exactly alike — especially off the exchange.
If anything, the ACA is a beneficial law for health insurance agents and brokers throughout the country. Agents can sell health insurance plans on and off the exchange, which keeps them in business and helps consumers find coverage from a knowledgeable source.
In fact, East Coast Health Insurance is certified to sell exchange plans in both state-run and federally-facilitated marketplaces. Our licensed agents can help you enroll in plans inside and outside of the health insurance marketplace, and help you decide what best fits your needs.