I have been writing life and health insurance since 1986. At the start of my career, I was an OK life sales producer. After about two years, I seemed to ht a brick wall and the life sales stopped. It was then that a veteran successful producer took me under his wing and told me to write health insurance for small-business owners and then pivot to the life and disability insurance opportunities.
Back in 1988, finding an insurer with a lower price and equivalent or perhaps better benefits was relatively easy as there were more than 15 companies to work with and multiple plan designs within each company. As sales started to grow, I developed a nice monthly income as the group clients paid their bills.
Advance the clock forward to 1990 and, here in my state of New York, things changed rapidly. At the time a very large, well-known not-for-profit insurance company found themselves in a very bad way financially. They petitioned the governor of New York, Mario Cuomo, with the charge that they, unlike other insurance companies, were forced to accept all applicants without asking medical questions and that the other companies were “cherry picking” the best applicants.
I suppose the fact that they were a nonprofit entity and thereby had advantages that the other companies did not have failed to enter into the discussion. Cuomo argued in favor of community rating and leveling the playing field, requiring all health insurance companies to 1) Charge the same price for the same health product regardless of gender or age, and 2) Prohibit the asking of medical questions to determine the acceptance of applicants.
At this time, most insurance agents sat on the sidelines and watched this government intrusion and did nothing. It should come as no surprise that when I say that when the Affordable Care Act passed Congress in 2010, I had a sense of déjà vu.
In New York, the net impact of the community rating law was that there were far fewer companies to offer coverage to customers. The products from one company to another were very similar pricewise for a given profile of benefits, so it was difficult to compete and assist customers on the basis of price. For individuals, there were a handful of products that were higher priced than their predecessors by large margins. Insurance companies really had no actuarial foundation on which to base their pricing.
In 1993, then-President Bill Clinton announced his intention to create a national health care plan. While Clinton was a popular president at the time, even his charisma fell short when it came to getting this legislative agenda item passed.
When the ACA passed in 2010, the lawmakers in Washington who were behind it never calculated that many insurers would leave markets rather than try and do business under the rigid ACA guidelines. The companies that remained (especially in the individual market) started to offer reduced provider choice in the networks that their plans depended on. The question here, of course, is how were consumer interests served by these skimpy networks?
I should also note that the ACA made available millions of dollars to encourage the startup of new health insurers called co-ops to add to the offerings for the public. But, across the country, these plans failed one by one. But as of September 2020, only three of the 26 Obamacare-era co-ops remained in operation.
So the question becomes, what role did the health insurance agent play in the transformations that occurred between 1990 and 2010?
The health agent is an advisor tasked with interpreting the legal wording that appears in a health insurance contract to a consumer who relies on the agent for guidance. With the arrival of the ACA, the individual market was introduced to new terminology. including exchanges, navigators, assisters and brokers.
As I see it, brokers are required to pass instruction and testing to earn a license from a state to sell health insurance products in that state. Brokers are also held to ethical standards of conduct, and are required to carry errors and omissions insurance, assistors and navigators are not expected to carry.
Changes In The Marketplace
From 1990, there was a steady closing and merging of general agencies that served brokers working in the health insurance market. Many brokers who had relied on the income provided by their health insurance sales simply gave up as commissions were reduced or eliminated and the limited number of products that remained were priced so similarly that moving a client from one company to another with the intention of replacing existing coverage at a lower price with another carrier offering equivalent benefits at a lower price, simply did not work any longer. Many long-term agents gave up on health insurance and gravitated to other products or left the business altogether.
The question I raise here is, how is the public being served by any of this? I think that the public largely bought into the ACA for three reasons.
1. President Barack Obama was very convincing in his appeal to the public. His promises of lower cost, keeping cherished doctors; and no exclusions based on medical profile resonated with many.
2. People misinterpreted the word “subsidy” and heard “no cost” or “cheap.” The fact is that premiums under the ACA rose dramatically.
3. There were many who liked the idea of not being excluded from coverage because of a pre-existing condition or an unhealthy lifestyle. A point here is that the ACA, by its elimination of medical questions, also provided a hidden incentive to people to not maintain healthy lifestyles as the barrier to health insurance access was all but removed.
Brokers were tasked with explaining to consumers all the changes that occurred in 1990 and again in 2010 as if we had anything to do with the changes. I have seen the frustration of people as I explain that a particular provider is not choosing to be in the network of the plan that they are selecting. Right before Thanksgiving Day in 2015, I, like many other brokers, was forced to find alternative coverage for many people covered by one of the ACA plans that went belly up despite receiving millions in start up capital from the federal government. Incidents like this have occurred throughout the country.
What Government Can Do
I am in favor of a very limited role for government as far as health insurance is concerned but I think the government can play a very big role in health care. As times have shown, the federal government is not afraid of spending money. The problem is they often do not spend the money efficiently or effectively.
But I think I see a way for government to really improve the health care system in our country.
I would like to see government offer a basic menu of health benefits on a no-medical-questions-asked basis. This coverage would only apply in government-run medical centers. The centers could be set up using some of the vacant commercial real estate that exists in our country. These spaces could be renovated to turn them into first-class medical facilities. My plan would call for all aspects of the center to be outfitted using furniture, medical technology devices, computers and any other items that go into a medical facility be 100% made in the U.S.
The facility could be staffed by a team of doctors and nurses who would come out of a corps of people that signed on as early as their first year in high school to train for careers in medicine. Admittance to this program would have very high standards. The program would offer several incentives – train in the program and graduate. The government will guarantee you a position at one of its facilities. Agree to work for five years at a good salary with benefits and then you can either remain in the government system or branch out on your own. If you decide to establish an office the government will give you a loan at very low rates of interest and also provide you with malpractice insurance at no cost.
As far as patients are concerned, the medical centers would be equipped to handle all forms of medical need. Patients would make copays on a means-tested basis for various forms of care. To offset catastrophic claims, participants would have access to mandatory stop loss coverage – which is essentially what Medicare Supplements already are.
Through a combination of payroll taxes, employers would partially subsidize coverage. I believe that between all the money government is spending to provide subsidies, reimburse insurance companies that have lost money in the individual market and wasteful spending in many other ways, a system like I envision ensures that those who pursue careers in medicine will have the means to go into private practice if they were so inclined.
Here is how I envision patients would be provided with freedom of choice. If you are healthy and looking for low premiums, you can get medically underwritten coverage that could be designed without all the ACA requirements that add cost. If you can’t pass medical underwriting, then you go to the government plan.
I believe that health insurance agents could be brought in to both help design a government program that works and to serve as the enrollers for coverage. Health agents would also be the ones to offer medically underwritten plans.
There are many forces at work in our country that are running counter to the future of health insurance agents. If we don’t start to find a meaningful role for our existence, the combination of politicians, special interest groups, insurance company bean counters and lack of concern on the part of the public will eventually lead to the end of the health insurance agent.
Jerry Cohen is a life and health insurance advisor in Port Jefferson, N.Y. He may be contacted at [email protected].
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