Ever since the passage of the Patient Protection and Affordable Care Act, benefits brokers and agents have had to make major adjustments to their business to account for lost health insurance commissions and renewals. Some called PPACA the death knell of the profession. Others rolled up their sleeves and vowed to soldier on.
But in Arkansas, brokers and agents discover there’s money to be made in health insurance again, thanks to a pioneering program between the federal government and the state that’s come to be known as the “private option.”
“If I was in another state, I would be standing in line with my legislators saying, ‘we need to do this — yesterday,’” says John Tjarks, president and owner of A-OK Insurance in Pea Ridge, Ark.
Instead of funneling federal dollars into the state’s Medicaid program and expanding it in the traditional sense, Arkansas state officials asked the federal government if they could take the money and build a program that allows people to buy private health insurance. In 2014, Arkansas received about $915 million for its private option.
The subsidy is available to applicants with incomes below 138 percent of the federal poverty line — about $16,000 for a single person and twice that for a family of four. Arkansas officials had to assure federal officials that people buying health insurance under the private option received the same benefits and shared the same costs as if they had signed up for Medicaid. The feds also told Arkansas officials that they had to use the same amount of money it would have received to expand Medicaid.
“This is such a deviation from the original plan that this was a real surprise to the policy people in Washington,” Arkansas Insurance Commissioner Jay Bradford says. “So this is an innovative approach and the feds saw that. As it unfolded, they saw that this is a real possibility to deliver these services to people in some of the states.”
So far, around 105,000 people in Arkansas have elected to buy health insurance through the private option. Estimates by the Arkansas Insurance Commission say that up to 250,000 people qualify for plans under the private option — a big pool of new customers for brokers and agents across the Natural State.
“They get an agent, and we still have the same function as before,” Tjarks says of the program. “We help with enrollment and problems just like we did before. From an agent point of view, this is best thing since sliced bread. It’s manna from heaven. We’re expanding our business. We can’t keep up with what’s coming through the door. We’re looking to move into a bigger building and hire agents. We have people who are coming up to our desk [at the hospital] and enrolling right there.”
Tjarks says signing up for the program requires visiting two websites, and only takes a short while. The program also allows agents and brokers to serve customers much as they did before Obamacare became law.
“[Brokers and agents] are an integral part of the program,” Tjarks says. “When someone comes into my office, I know I’m going to be able to sell them something. In another state, when someone who is under 138 percent of the federal poverty line, the agents are not going to be able to sell them anything.”
Arkansas’ private option was designed by state Republicans as a way to privatize one of the more politically contentious parts of PPACA — the expansion of Medicaid — and passed with bipartisan support, including the state’s Democratic governor, Mike Beebe. State officials kicked off the program in 2013 and received authorization from the federal government to continue it through 2014. However, some state legislators held up the program in the Arkansas House of Representatives through the budgeting process. After a lengthy battle in this year’s legislative session that spanned four votes, the program was renewed.
Several other states — including Pennsylvania, New Hampshire, Utah, Tennessee and Florida — are looking at the Arkansas program while Iowa passed its own version late last year.
“At first, the typical reaction from agents and brokers was concern,” says Bradford, a former agent-broker who owned First Arkansas Insurance in Pine Bluff, Ark., before taking over as commissioner. “But once we proposed putting it in the private realm, over 1,500 agents got licenses and are out there producing. It’s another 100,000 people paying commissions at this point. A good, aggressive agent is a partner, and they’re central to marketing to consumers. The ones who’ve figured it out are doing very well.”