The dust may have settled on the Hill for now, but agents and carriers alike can almost certainly expect more change. But where does "reform" leave health agents and benefits brokers right now? Is it time to get out, or get ahead?
By the time you read this, it could all change. Yet, health reform's regulatory chaos has some analysts already discarding health insurance agents as the first casualty of health care reform. Rest in peace to those who find their fate relegated to the same career trash heap as travel agents, a gratuitous intermediary likely facing a complete phase out.
In the weeks since NAIC passed its resolution requesting lawmakers preserve the role of licensed producers in state-run health insurance exchanges, Katz - in his own blog - has seen agents, brokers and those associated with the industry intensely examine their own fate. There are those who reason it's simply a matter of time before small-group and individual market agents and brokers become obsolete and those who maintain the complexity and nature of health insurance is enough to keep licensed producers in demand.
Katz himself is not convinced the end is near.
A matter of convenience
Katz emphasizes broker and agent commissions have always been an administrative convenience and a cost-saver, and as such should be counted in MLR calculations as a pass-through expense, similar to how real estate agents are paid.
"The focus of the MLR is to reduce the overall administrative costs involved in health insurance. One step that accomplishes that today is carriers accepting commissions from the client on behalf of the broker and passing 100 percent of that through," Katz says. "It's not like the carrier profits in any way from collecting that commission and paying that to the broker.
Doing More for less
Clearly agents and brokers are feeling the squeeze already. "Insurance companies have already started paying flat fees instead of commissions and many large insurance companies as recently as, for example, Humana and WellPoint have mentioned pressures on their commissions during their earnings call," says Ron Agypt, vice president of broker sales at Aflac. "[Brokers are] getting pressure by both the medical carriers and by the employer who's really saying to them, 'We need more for less.' Just like we're asking our people to do."
HealthPlan Services, an outsourcing solutions firm for insurers in the individual, small business, association and union trust markets, recently polled operational executives for 26 health plans with a commercial product line and at least 50,000 members enrolled in individual/small group products. Their survey showed 58 percent of respondents are still examining the impact reform will have on agent commissions; 27 percent already have decided to reduce commissions to meet the MLR floor.
Increased client demand is nothing new, according to TJ Gibb, national practice leader of specialty benefits at Humana. "I've been hearing from brokers for the past five-plus years that clients expect more from them. [Brokers] need to have efficient pricing models and most importantly, they need to have a thoughtful strategy with their customers to say well, what does your budget look like for benefits?"
NAIFA's Boyle says "as members prepare for the likely reduction in compensation, some are looking at increasing their focus on compliance service, others are considering a greater emphasis on other product lines and many are looking at a combination."