Broker Commissions ‘Not Part Of The Problem,’ Agent Groups Say

It’s bad enough that health insurance broker commissions have been disappearing since the Affordable Care Act went into effect.

Now a Senate bill includes a provision that would require health benefits brokers to disclose their commissions and other incentives they receive from the insurance industry.

The Lower Health Care Costs Act was introduced by Sen. Lamar Alexander, R-Tenn., and Sen. Patty Murray, D-Wash. The bill takes aim at a number of issues, including surprise medical bills, high drug prices and public health problems. Buried in the bill is a requirement that health benefits brokers reveal fees and other enticements they receive from the insurance industry.

Representatives of two health agents associations said they are in favor of transparency, but questioned how forcing brokers to do even more disclosure would bring down the cost of health care.

“It’s really appalling because our members have been fighting to get paid,” said Ronnell Nolan, CEO of Health Agents for America. “And that bill is important. Lowering health care costs is what we want for our clients. But our members aren’t getting commissions on the individual market and UnitedHealthcare is not even paying for groups of 50 and above. So how can anybody point the arrow toward our members and say we’re part of the problem? We’re not part of the problem. Agents have been losing money since the passage of the ACA.

“To include agents in a bill that is aimed at lowering health care costs insinuates we are part of the problem for high health care costs, and that’s not true,” Nolan continued. “Insurance premiums are not high because insurance brokers are getting exotic trips and bonuses and things like that – it’s not true.”

She cited research from Louisiana Insurance Commissioner James Donelon that showed broker commissions made up about 5% of insurance carriers’ total spending prior to the ACA. “And we  know it’s gone way down since then,” she added.

Nolan said her group is asking Alexander to remove that provision from the bill. HAFA members will be in Washington for their annual visits with lawmakers June 10-13, and the bill will be part of the discussion. In addition, HAFA will issue comments on the bill during the official comment period, which ends June 5.

The National Association of Health Underwriters has not taken an official position on the bill, but the association “is definitely in favor of transparency of costs on all levels, including broker compensation,” said Marcy Buckner, vice president of government affairs. However, she added, NAHU is concerned that the provision duplicates broker compensation disclosures that are already in effect.

“Our members are questioning what else is possible for them to be required to disclose. They are already subject to disclosure in the group market for groups of more than 100 – the Form 5500 requirement. Also, often when they’re working with the larger groups, plan agreements are pages and pages long and include everything that goes into that plan detail. Compensation disclosure is part of that. And certain states have required disclosures.”

There is little difference in broker compensation from carrier to carrier and from plan to plan, Buckner said.

“But it’s also about keeping that book of business and doing what’s best for your client because that’s what’s going to keep them coming back to you year after year,” she said. “It’s very easy to lose your broker of record status if you don’t act in your client’s best interest. By doing that, they are helping to lower the premiums their clients are paying.”

Despite the disclosure provision, Buckner said, NAHU is positive about some aspects of the bill. The bill takes aim at surprise medical costs and high drug prices, which she said will bring down health care costs for consumers.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].