Louisiana Bill Would Allow Health Advisors To Charge Fees

Health insurance agents will be able to charge customers a fee to help them buy individual market policies under a measure in the state Legislature that targets an unintended consequence of the Affordable Care Act.

Across the country, broker commissions from health insurers for selling individual market policies have significantly declined under the health law. As high as 10 percent of the policy premium before the ACA, commissions declined about 50 percent nationwide almost immediately under a cost-saving provision requiring insurance companies pay out a minimum percentage of premiums toward medical claims or quality improvements.

With limited revenue available for profits and administrative expenses, in addition to suffering large losses in the individual marketplace since 2014, insurers have switched to flat monthly commissions and some have stopped offering commissions entirely. Under current state law, brokers are barred from charging fees to individual market customers.

As a result, some brokers have stopped selling individual market policies and consumers have a hard time getting an agent’s help, said Rep. Mike Huval, R-Breaux Bridge, who is sponsoring House Bill 407.

“When Obamacare came into play, it did a lot of good, but a drawback was that for these independent agents that sell health insurance, their commissions either went to zero or were very little,” Huval said. “So all we are doing here is: If the consumer wants to buy insurance from a local agent, it gives them an opportunity to buy from a local agent.”

Huval’s measure does not limit what agents can charge customers, but he said it would allow them to earn a “reasonable fee” based on what market competition will bear for various plans.

“If the word gets out that you need to call agent John Doe because he’s only charging a $15 fee and the guy across town is charging a $50 fee … the market will work itself out,” Huval said.

Ronnell Nolan, president of Baton Rouge-based Health Agents for America, which is pushing Huval’s bill and similar efforts nationwide, said a reasonable fee could range from $25 a year for a single person whose agent anticipates less work resolving claims and making changes for children or divorce, to $25 a month for a family “in which there could be hours spent a month to assure the best service available.”

Although there would be no limit on fees, consumers must agree to the fee amount by signing a disclosure that notes they could avoid the fee by either buying their plan on the marketplace’s online exchange, healthcare.gov, or through health insurance navigators at local institutions that provide free enrollment assistance.

“Agents do not have to charge anything, nor does the consumer have to use an agent that charges. It will be their decision should they want ongoing service and pay the fee. This fee is totally voluntary,” Nolan said.

The measure passed 94-3 in the House and on Wednesday was approved by the Senate Committee on Insurance. Other supporters include the Louisiana Association of Health Underwriters and the Independent Insurance Agents and Brokers of Louisiana.

Blue Cross and Blue Shield of Louisiana, the dominate insurer in the individual marketplace, said it has not taken a position on the bill. In a statement, Blue Cross said it changed its commission schedules for the individual marketplace in 2014 from a percentage of premiums to a flat monthly fee, which resulted in “somewhat lower payments.”

“Given that the ACA resulted in rapidly rising premiums in the individual market, we felt the change to a flat monthly fee was a more appropriate payment model, in line with both the work effort of the broker community and overall changes in the industry,” the insurer said.

The company noted that it periodically reviews commission structures to ensure they are “competitive and appropriate.”

For consumers who use a broker, fees would add to the cost of obtaining insurance in the individual market, where the premiums have increased significantly, in particular for those who earn too much to receive tax credits to lower their premiums.

Premiums in Louisiana increased an average of 25 percent in 2017, following 15 percent increases in 2016 and 2015, as the marketplace has struggled to attract healthier and younger people to balance its risk pool, according to the Louisiana Department of Insurance.

Early indications from a handful of states that have released rate filings show that premiums could again increase significantly for 2018 plans. In Connecticut, insurers are seeking rate increases between 15 percent and 34 percent; in Maryland, insurers are requesting increases ranging from 18 percent and 60 percent.

Health experts say 2018 rates could reflect worry among insurers about whether the Trump administration will enforce the mandate to buy insurance and continue to fund cost-sharing reduction subsidies, which insurers receive to fulfill an ACA requirement that they lower out-of-pocket costs for lower-income consumers.

To sign up for free CityBusiness Daily Updates, click here.

Copyright © 2017 BridgeTower Media. All Rights Reserved.