July 23--Federal health care reform means big changes for consumers as millions of previously uninsured people gain access to coverage for the first time.
But the recently upheld Affordable Care Act could also signal a core shift in the industry of insurance brokers and agents, some of whom fear their role will be supplanted by the creation of health insurance exchanges.
Under the Affordable Care Act, states must establish the exchanges as a way for people to search for and buy insurance plans that suit their needs, particularly individuals who don't have access to a health plan through an employer or spouse, as well as small businesses seeking to cover employees.
Some insurance agents and brokers feel that Washington's planned "health benefit exchange," a public-private partnership, steps on the toes of their business. Agents typically work with specific insurance companies and help consumers choose a plan within that company's offerings, while brokers advise clients on insurance plans offered by a broad spectrum of companies.
The exchanges will include some form of "navigator," people trained to explain the various options available to those seeking insurance coverage. Currently, Washington has a group of about 400 volunteers who perform a similar function as part of the SHIBA program, or Statewide Health Insurance Benefits Advisors.
With the establishment of the state exchange, "They're taking my job and giving it to someone else -- that's how I see it," said Richard Miller, a local insurance agent and financial adviser. Health insurance clients make up about a third of his business, or about 250 people.
The state Legislature determined this year that navigators will not need to be licensed in order to provide those services. In Miller's opinion, however, volunteers or navigators who do not have a brokerage license will not be able to provide the expert advice that consumers need to choose the best plan for their situation.
State insurance commissioner Mike Kreidler said part of the reasoning was that much of the training needed by agents and brokers, who require very specific, technical knowledge of certain plans, would not be relevant to navigators, and would be an "additional cost to the system with no measureable benefit."
Navigators would also represent a shift away from the tradition of neighborhood insurance agents who have served the same clients for years.
"I'm sure (navigators) would be well-meaning and want to do the right thing, but nothing takes the place of a personal relationship" between agent and client, Miller said. "There are some products and services that we're willing to buy electronically or over the phone. ... Insurance isn't one of them, especially health insurance."
The Affordable Care Act lists brokers and agents as potential navigators, but as such, they wouldn't be compensated by insurance companies for enrolling people in their plans, so Miller doesn't see it as a viable option.
Most brokers and agents work on commission and are paid only when their client buys a particular plan.
But even before the federal reform law passed, insurance companies were reducing and, in some cases, eliminating commissions for smaller plans, which has put agents and brokers in the difficult position of trying to provide services for little or no compensation.
"What do I say to a long-time client who has been having me handle their insurance, and all of a sudden I don't get paid for it anymore?" Miller asked.
Some see the decline in commissions as a push to move toward a fee-based payment model, where agents and brokers are paid as consultants for every visit.
That's the structure employed by Dan Fisher, owner of Yakima-based EMSpring, a brokerage firm that relies on commission for only about half its income.
"We've had no problem with the changes coming our way in the industry -- reducing commission schedules, etc. -- because we are used to charging fees," Fisher said of his company. However, he said, "Some brokers are very threatened by that."
As for the exchanges, Fisher said it remains to be seen how that will affect his business. He and his firm already perform the navigator function, he said, and will continue to do so.
"The exchanges, I think, would help bring more people in the form of navigators to aid the consumer in making correct choices. That's a good thing," he said. "Whether it competes with us or not, that's irrelevant to the public."
The real risk, he says, is that the companies that his business serves might decide to discontinue their employees' insurance coverage, under the assumption that their employees will now be able to find insurance on their own through the exchanges.
If employers look simply at the line-item cost, then it would be much less expensive to have their employees get insurance through the exchange, Fisher said. But that has to be weighed against the evidence that an established company health plan contributes to lower turnover and healthier employees, who in turn are more productive, he added.
Insurance commissioner Kreidler said he actually sees health care reform as a boon to insurance agents and brokers, as millions of previously uninsured people nationwide will now need to find health insurance.
"I think, far from doom and gloom, (reform) represents an opportunity for insurance producers" with good client relationships, Kreidler said. "Not just with the influx of all the people with inquiries, but because they've developed that relationship and that's where individuals will seek advice in the future."
--Molly Rosbach can be reached at 509-577-7728 or at email@example.com.
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