• Do not weep for the insurance brokers

    A longtime reader writes:

    OK newbie, here is something that has given me pause over the last few weeks.

    Health Exchange begins in a few years, and you are an insurance broker in 2010 (notice the attention they are garnering in the press nowadays). As you go through the Kubler Ross stages, you realize your imminent demise is a potential reality.

    The possibilities are as follows:

    1. Get your trade group to lobby the hell out of the Washington and find a vestigial role in the new exchange. You are unnecessary, perhaps, but “we will find a place for you,” cause, well…that is what Congress does best.
    2. You jump ship, and begin that correspondence course you always dreamed of—time to get out, if you know what I mean. You see the flat line on the monitor beginning to coalesce.
    3. Do not look towards the Democrats, as they are staring in the opposite direction. “Hey, that is the market for you, kill or be killed.” Taste your own medicine Wall Street boy.
    4. Look towards the Republicans, because it is ObamaCare after all, and this is not a “free market” (it is a regulated utility), and we will need these folks to navigate through a consumer-oriented landscape.
    5. Hope you are one of the few left standing to sell the niche products to fill holes and cater to the affluent.

    OK smart guy, comment. :)

    I will, thank you very much.

    Long term, I have no idea what will happen.  Maybe the worse fears of conservatives will come true and we will shift over time to a single payer system.  Maybe the whole thing collapses and insurance goes away.  Maybe nothing changes at all.

    But in the short term, I don’t think things are nearly as dire as you think for insurance brokers.

    First of all, those brokers which help large businesses provide insurance to their employees (the vast majority of insurance) will continue to function as normal.  Life will go on.

    For those that sell individual insurance, well, that will still need to be sold.  Yes, it will be more tightly regulated.  But never underestimate the power of government to make things more complicated than they will need to be.  Do you think the average person will understand the difference between a bronze, silver, gold, or platinum plan?  Or a catastrophic coverage plan versus a high deductible health care plan (if those exist)?  There will still be a market for brokers to help people make choices and navigate the system.  In fact, I can imagine with a more level playing field, insurance companies will be more desperate than ever to subsidize good salespeople who can get the public to choose their plans.

    Brokers aren’t happy about the medical loss ratio cap – that will reduce the available amount of money for commissions.  But they have to be thrilled that the public option got crushed.  They also should be happy that the exchanges are states based and not national.  It’s not all bad news for them!  In fact, it’s possible that some states may have markets outside the exchange (without subsidies), but that’s not totally clear.  If there are, it will be even more complicated – and good for business.

    Nor is this group foolish.  They have already been hard at work getting HHS to include them in the portal healthcare.gov.  Moreover, they scored this:

    Thirteen states will sponsor a resolution affirming the “indispensible role that licensed insurance professionals play” at the NAIC Executive Committee meeting today, according to a draft obtained by PULSE. The resolution will specify that Exchange Navigators, a reform-created designation for individuals who help consumers obtain coverage via the Exchange, should stay out of licensed brokers’ territory, “limited to directing consumers to government agencies and licensed insurance professionals.” The resolution comes on the heels of a similar health committee amendment Monday. It signals that NAIC will watch out for brokers, who have worried about their business as consumers purchase from the Exchange directly and turn to Navigators, who do not require licensing, for assistance.

    As I said before with insurance companies, this industry is very, very good at what they do.  Don’t count them out.

    • Aaron
      Actually, it was the letter from the 13 states you quote at the end of your post that got me to thinking about this in the first place and prompted my query. It is political pressure that facilitated its synthesis (see point #1). Just because they say it, and want to believe it, does not make it so.

      On govt making things making more complicated, I am with you. However, seems like the folks in Mass are getting the tiered plan configuration through their health connector. While I never underestimate the ability of the common citizen, including myself, to muck things up, Platinum, Gold, Silver, and Bronze are not too hard to comprehend. If you can select and order Quicken Basic, Deluxe, or Super Deluxe, etc., and read the dotted thingies in the columns of Intuit’s homepage, I think you can grasp a premium at 60%-90%, pick one, and move on–it is real money after all.

      My sense is they will take a haircut, but I am agnostic on it overall. Again, it is Uncle Sam in the end, on that we wont quibble.


    • Brad

      I have to disagree with you there. I think there is ample evidence that people won’t understand the difference. Try getting someone over 65 to wade through Medicare supplemental plans. Try getting people to choose a plan from their employer when they have more than one option.

      I have trouble sometime, and I really do know this stuff.

      As Austin has said the last few days, health care is different. It’s not the same as choosing a small, medium, or large.

    • Small and individual market with <65 yo folks more facile with Internet., Keep choices simple with explanatory interface and you might be surprised (you read Nudge I assume: choice architecture!!!),

      Agree, Medigap too complex, enrollees too overwhelmed, not crafted on ACA platform where, hopefully, with more forethought, this will get worked out more efficienctly. Again, , Mass, for the most part seems to be working according to Kingsdale. As good a case study as we have.

      My guess is if we were talking face to face, we would wind up in the same place.

      Anyway, we'll see, and thanks for taking the time to answer,