Two provisions of health care reform could be devastating to health insurance agents
The first requires states to create health insurance exchanges
where consumers can go online to compare coverage and costs of various plans. Agent and broker groups are concerned consumers won't seek the assistance of brokers if they can go to one website to view their options and make their purchase.
The second requires insurers to spend at least 80 cents of every premium dollar on medical care. The Department of Health and Human Services recently finalized the rules for the medical loss ratios
, and categorized agent commissions as administrative costs. Insurers are now considering cutting or eliminating these commissions to save money.
For example, Aetna sent a letter to its brokers on Nov. 22 that said the insurer no longer includes commissions for midmarket premiums. Instead, Aetna will give brokers an amount approved by the employer client. Blue Cross and others have made similar announcements.
Given the implications of these measures, it appears agents and brokers could be in danger of extinction. However, optimists argue the following fixes could keep agents in business:
Some states are seeking waivers to exempt them from the MLR rules. Others are anticipating Congress will make changes to the rule.
In 2014, under the insurance mandate many consumers will be purchasing new health insurance policies, so volume may make up difference.
Or, exchanges could pay agents a set amount for each individual they assist. For instance, Utah’s exchange, in place since before the health care overhaul, encourages consumers to use agents registered with the exchange. The agents then receive payment based on each client they assist.