David Smith admits he’s a “lone wolf.” He’s seen as an outsider in his community of health insurance brokers. His ideas and ideals might seem radical.
David Smith is voting for President Obama.
“I’ve gotten grief for it but I don’t really care,” the vice president of health and welfare benefits at Ebenconcepts says. “People say to me all the time, ‘I can’t believe you’re in this business and you’re supporting the president.’ And I just ask, why? I can be in the business and have my own personal politics. Frankly, it’s helped me talk to a lot more people.”
The North Carolina-based agent has been a lifelong Democrat. And his political views didn’t change when the Patient Protection and Affordable Care Act came into the picture, despite the common perception from brokers that the law signed their death warrant.
To Smith, the law benefits the consumer and while it doesn’t solve all his health care concerns, it’s a start.
“Let’s focus on the big issues: The uninsured is a big issue. The cost issue is a big issue. The fact that people aren’t taking care of themselves is a big issue. And the law is doing something about all these issues,” Smith says.
What does the law not do? It doesn’t doom brokers, he says.
The great debate
When the president signed PPACA into law—and after the Supreme Court upheld it this past June—most industry professionals insisted it would send the country’s more than 100,000 health insurance agents and brokers straight to the unemployment line.
It all comes down to the medical loss ratio calculation: PPACA dictates health insurers must spend at least $.80 of every dollar in premiums on actual health care in the individual and small group markets, and $0.85 in the large group market. To comply with the law, insurers have to cut back on commissions—making it impossible for many brokers to continue the way they do business as is.
Conventional wisdom suggests brokers would become the new travel agents: unneeded and obsolete. The new insurance exchanges resulting from reform would emulate sites such as Orbitz, making health insurance shopping easier than ever while also (potentially) making the role of the broker a thing of the past.
As one broker said: “Since many exchanges will be using online service to compare and enroll, and the current requirement is to include commissions in the 15 percent of premium dollars, I would assume we’re headed the way of buggy-whip makers as cars became the mode of transportation.”
To many, President Obama was the guy who personally threw the entire industry under the bus, and threatened their jobs and their livelihood.
So how, many brokers argued, could any of them rightfully give their vote to him?
“Most brokers support Romney because anything against Obama or Obamacare is the way to go,” says Daniel LaBroad, president and CEO of Ovation Health and Life Services in Dallas. “People feel they’re having their money taken from their pockets by a growing and intrusive government.”
There are a number of brokers who argue a “good broker” cannot vote for Obama. David Koch, CEO of River Benefits in Ocean, N.J., is one of them.
“Almost everyone votes their pocketbook—or what is left of it after Obamacare,” he says.
Koch argues Republican candidate and former Massachusetts Gov. Mitt Romney should be guaranteed all of their votes.
Despite that fact, Koch is quick to say health reform isn’t actually a threat to his business personally: “I’ve transformed my business to help many staffing companies with health care reform. It’s actually a huge opportunity to me.”
Others aren’t so positive about their upcoming opportunities. Roger Walker, an agent at Advisors Medicare Solutions in Phoenix, compares the new broker environment under Obama to the Medicare sales environment.
“Not good pay and lots of tests and certifications, and a highly regulated workplace for brokers,” he says. “If you like low pay and highly-regulated work, vote Obama.”
Sandy Hightower, an independent benefits consultant in Charleston, S.C., shares the same sentiments.
“Re-electing the president pretty much ensures insurance agents will be non-existent,” she says. “Where and how would we, as agents, get paid? An exchange will not grow my book of business. It will kill it.”
Some are torn
For some, the health reform debate is about more than just their own job. Some have a more personal decision to make this election cycle.
Gentrie Pool, a regional sales manager at IIS Benefit Administrators in Dallas, for example, considered voting for Obama based solely on her experiences as a health care consumer.
“My husband is a quadriplegic and Medicaid/Medicare expansion would grant him more access to the specialists he needs and possible more attendant care, which is essential but very limited or excluded from health insurance now,” she says. “These changes would extend his quantity and quality of life. And reduce the caregiver burden on me.”
She’s quick to talk about a number of good aspects that make up the PPACA: She likes that carriers now have to justify substantial increases where they did not before; she appreciates the pre-existing coverage mandate; the benefit summaries; the accessibility.
“If I were voting for just my own personal interests, I would have voted for Obama,” she says. But taking other factors in consideration, she decided against it.
“It’s not all about me,” she says.
Still, Pool says, “I am a fan of health care reform, not necessarily this reform—or Mitt’s Massachusetts plan, either. We have to start somewhere and I would be naive to think the first shot at it would be flawless.”
A vote for Romney
But still despite more support for the Republican contender, this year proves a little tricky: Romney was—as people from Pool to Obama point out—the creator of health reform.
“Many brokers are praying Romney wins and repeals it. Not happening,” Koch says. “Romney invented it.”
“Health care reform is inevitable regardless of which party or candidate is elected. No matter whose version is passed, there will be good, bad and revised parts,” Pool says.
Though repeal has been called for a number of times—and promised by Romney—experts say unraveling the massive and long-panned-out law would prove tricky. If not impossible. For one, Republicans would need to hold a 60-vote majority in the Senate to stave off filibusters and repeal the act. And compromise in the polarizing Congress is essentially a far-fetched dream.
Even most brokers admit it would be a “small miracle” if Romney is able to repeal it. Others say since most of the law’s provisions are in place already and repeal is essentially an empty promise, it doesn’t matter who wins the election.
“We’ve embraced Obamacare, good or bad,” LaBroad says. “We don’t expect it ever to be fully repealed, and many of the changes will remain the same regardless of the election. Obama wins, we are in great shape for the future, and even better if Romney wins.”
But still, a Romney vote is predictable for the industry as a whole. It’s also plausible that Romney, if elected, could meddle with some of the law’s provisions, and help amend or repeal parts that will directly affect the federal budget.
Some industry professionals say it’s not just about their own future they’re worried about—they’re concerned for consumers. They’ll be hit with even higher premiums than they are now, many argue. The “affordable” part of the law doesn’t exist. All the extra provisions will hit taxpayers—and hard. Many more aren’t optimistic small businesses will be able to stay afloat in a post-reform world. The country’s poor economic road we’re on now, too, will continue to hurt Americans.
They’re convinced Romney will help.
This election is more than just reform: “I vote my conscience, not just my pocketbook,” Koch says. “Obama will bankrupt us with his loony ideas about globalizing our economy. And his deficits are insane.”
New ways of doing business
One thing that isn’t up for debate is that, regardless of who wins the election, some kind of health reform is happening.
Some carriers even embraced some popular provisions of the law even before the Supreme Court determined their ruling on its constitutionality. Insurance giants UnitedHealth Group, Humana and Aetna said no matter the future of the PPACA, they’d keep the provision that allows kids 26 and under to stay on their parents’ health insurance plans, as well as the pre-existing condition one.
Some carriers are nervous about repeal in the sense that they have to, yet again, change their business plan. While some argue the law does nothing to curb costs, others stand to benefit monetarily from having more customers enroll in their plans.
The industry will continue to change, and brokers need to know how to survive that.
Plus, there’s still hope left as far as the MLR requirement: It’s H.R. 1206, a bill introduced in March that would exempt insurance agents’ commissions from the medical loss ratio calculation in the PPACA. The House Energy and Commerce Committee passed the bill Sept. 20, though its future in the more evenly-divided Senate later this year is more unclear. At the crux of the argument over the issue is politics, yet again: Republicans support the bill, saying it would protect the jobs of agents and brokers, while Democrats argue it would weaken an important consumer protection.
Putting that aside, there are a number of new ways of doing—and thriving in the—business, industry experts say: Introduce voluntary benefits to clients. Use technology administration and enrollment tools to create efficiency and introduce innovative products. Go into compliance issues. Try Medicare sales. Become an expert on health reform and explain it. Be the person that will explain and navigate the exchanges. And perhaps most importantly, be consultative.
“The only broker who fears a changing administration is a broker who is stuck in their old ways,” says Troy Underwood, CEO of Benefits Connect, an online benefits enrollment and administration system based in Rancho Cordova, Calif. “[We’re] not doomed if Obama is re-elected.”
And though commissions are at the forefront of many brokers’ minds, there are a handful of others who say the issue isn’t all about the money. For instance, though LaBroad is supporting Romney—based on the Republican’s stance on business, capitalism, Dodd Frank and smaller federal government—he’s perfectly fine with how politics have changed his industry.
“I feel that brokers have made too much for too long, and have had a pretty cushy lifestyle. It’s time the insurance agent changes, evolves and our business evolves. If you cannot embrace that change and evolve, you will be gone,” he says. “We changed our business model long before ACA was approved, just in anticipation of the possibility. Now we are way ahead of others, and ready for whatever next year and this election brings.”
LaBroad says his business was built on voluntary worksite and ancillary products, and the health insurance commissions were secondary. For working in a post-reform world, he says: “My goal is the same as it always was—offer more services for less money. I use technology, carrier resources and creative thinking to provide a superior experience for less cost to our clients.”
A vote for Obama
To the Obama supporters in the industry, the president simply needs more time to continue what he’s done in his first term—and they’re willing to speak up about it.
“I think there are things that he’s done that needs to be finished—health care reform being chief among them,” says Smith, who notes that he’s gained business on the issue of compliance as it relates to reform. “And at one level, it’s what our industry and the economy needs. We need to do this, we need to implement it and then we need to figure out what else needs to be done. The idea of this pipe dream that this is all going to go away if someone else is elected president is just not realistic.”
“The president has also done many good things in his first four years, and he really needs four more—as former President Clinton did—to continue to move this country in a positive direction,” says Michele Wyche-Hayes, a benefits consultant at Colonial Life who’s been a fan of Obama since he spoke at the Democratic National Convention in 2004.
As for those who argue health reform will hurt consumers, they say that’s simply untrue. “This benefits the consumer," Smith says. "The law wasn’t about agents getting money, it’s about protecting the consumer. [As agents], we should preserve the consumer view to help get them their best options.”
“Those who oppose it, I feel, do not understand it, and do not like President Obama—period,” Wyche-Hayes says. “As insurance professionals, we all need to understand how reform will help everyone and we must conform. We have to be more consultative in our business and teach our clients how to use insurance.”
For the Obama supporters, too, there's more to their vote than just reform.
For Maria Donlon, a service coordinator at Capital BlueCross in Schuylkill Haven, Penn., her vote belongs to the president for reasons other than health care, including their shared beliefs of continued funding to Planned Parenthood and a woman's right to choose. She also says she agreed with the auto industry bailout and money deliverance to the states for infrastructure projects, which Donlon says, has kept her husband, a union worker, working.
This is despite the fact that Donlon's salary as a sales support staffer—which is salary plus incentive—will take a significant hit. She believes Obama will help the middle class, and women in particular.
In a hotly contested debate in a hotly contested election year, it’s no question the issue has in different cases, both unified and divided the industry. At the very least, it’s ensured that politics and insurance are forever intertwined.
Perhaps most frustrating for Democrats is the fact that it’s shown there’s not much room for middle ground.
“In our business, we pay too much attention to politics, and too little attention to politics,” Smith says. “If [as an industry] we’re entirely focused on what Republicans want, you’re powerless when the Democrats are in charge. It’s left us in a difficult place as an industry.”
[Also read "The broker vote"]