The Future of Brokers

By Greg Scandlen

Now that the Medical Loss Ratio (MLR) standards are in effect, the role of producers is once again under scrutiny. Writing in Health Plan Week, Steve Davis reports on the recent NAHU conference in Washington, which included a presentation by former Pennsylvania Insurance Commissioner Joel Ario, who now directs HHS’s Office of Insurance Exchanges. Mr. Ario thinks there may be a role for brokers in the insurance exchanges as “navigators,” but:

Ario said the law envisions “baseline similarities” between navigators and insurance agents. However, he said agents sometimes don’t possess necessary “linguistic capacities” and “don’t necessarily serve all of the different populations as well as they could be served.” Those comments were met with boos.

In a follow-up post on the AISHealth Blog, Rick Biehl fleshes out the situation:

Certain features of health reform will invariably be detrimental to health plans, hospitals, provider groups and pharma companies. But for most of these bloated corporations the impact of reform is likely to resemble a pebble dropping into the middle of a lake. For agents and brokers – many of whom have been productive members of local communities for decades, if not generations – reform could mean the end of their livelihood and perhaps their profession. The lack of reason and fairness of this unintended consequence is palpable.

But Mr. Biehl thinks this is all just a horrible mistake:

While clearly not the intent of Congress, “insurance broker/agent” may be the only job title in America that, on a personal level, is facing such dire consequences under reform. Who else in health care business stands to suffer such enormous personal losses?

Sorry, Rick, but you are wrong on this. Getting rid of agents and brokers was EXACTLY the intent of Congress, and all other progressives of the past 100 years. When these people talk about “administrative waste” they mean broker commissions.

“Getting rid of the middleman” has been a core tenet of socialist policies forever. Salesmen especially are seen as leaches on society who add costs but no value, and the socialist economies suffer because of it. The old Soviet Union actually grew plenty of wheat on the farms, and it had plenty of hungry consumers in the cities. What it was missing were the middlemen who could arrange to transform the wheat into bread and transport it from the farm to the city.

Congressional progressives knew that by reducing loss ratios and creating exchanges, they would drive brokers out of business. They figured that consumer questions could best be answered by community organizers with the “necessary linguistic capacities” and experience in reaching out to “communities.” This was seen as a job for ACORN, not some independent businessmen.

All this has been obvious since before Obama got elected. It is shocking that the brokers still haven’t figured it out.


10 Responses

  1. What a joke this whole thing is. I suspect that agents and brokers really believed that by having the ‘navigator’ reservation they would be safe. It is a fact that the command and controllers in DC have been working to get brokers and agents out of the business for a very long time. I have been dismayed that there never was a vigorous opposition from not only the brokers, but the hospitals, and the insurance companies during this sham of a piece of legislation.
    And it will be a shock to these groups when the time comes where the individual has complete control of medical service decisions are done on iphones, ipads and droids!
    There is a segment of people this country that likes riding in the cart and it seems to me that we have them with the working and tax paying paying for them for the foreseeable future.
    Just leave us alone with the hard earned money that we have and let us make the decisions that are best for us. Society is changing and doing so very fast. Shame on the brokers for being so silent, hope that we can find new careers, since we are becoming dinosaurs!

    • Brokers tell me that, part of what they are doing is ignoring the impending doom cast upon them by this illegitimate PPACA Law, I guess, hoping it will go away. The mistake that most organized brokers (read agent organizations) make is that they think they can negotiate with the administration and Congress. Wrong!!! That would only be possible if the intent was to fix what is wrong with the system. This administration and Congress, by the very act of passing a law that, at the very least, went WAY BEYOND WHAT WAS NEEDED for the purpose of taking control, has demonstrated they are not about fixing anything! They are only about power, plain and simple!

  2. The broker/agents were actually first in line lobbying against their own demise (NAHU was a co-plaintiff in the Florida case). I agree with Greg that the intent was always to eliminate brokers, so they were dead meat from the start. But they fought it tooth and nail.
    I disagree with two AIS arguments: first, that brokers will all have to commit suicide (most are multi-line or will survive as wards of the state or insurer networks). No doubt this was not the impression given off at the broker meeting. Second, I actually am starting to look favorably on the idea of Navigators, not as an alternative but a reality check if exchanges end up being the norm.
    As it becomes obvious that half the population that is supposed to be in exchanges doesn’t show up, states will have to revive the idea of Navigators (as defined by HHS of course). Would not suprise me if brokers/agents start to see a (limited) revival once the exchanges come up short and need to use real brokers, and pay them which is also included in the PeePacUh law but never mentioned. Of course, by that time all of the broker networks left will be owned by the carriers and TPAs, but it’s not the same as broker holocaust.

    • I’m not sure that is correct, Bill. I haven’t seen any reference to NAHU being a party to the suit. NFIB is, but not NAHU that I’m aware of.

      And I disagree that NAHU fought the law “tooth and nail.” They wanted the ol’ “seat at the table” so were trying to be cooperative. Even today, NAHU’s main complaint is that the penalty for violating the mandate isn’t severe enough.

      In fact. most brokers thought a mandate would be swell — “People will have to buy what we sell!” That was always short sighted. If people have to buy it, no one needs you to sell it.


      • That’s right Greg, I was wrong — it’s NFIB not NAHU, which is run by Janet Trautwein. She was lobbying the NAIC folks and especially it’s former President at the WHCC event last September right after the regs came out. At the time I thought it was overboard. So they were cozying up to NAIC.

  3. The government feels that brokers are evil, because they have the ability to educate the client on 1) How to save money, and 2) How DC policies affect them. They feel the same way about MD’s. The less people that interact with “subjects”, the more that they can control propaganda.
    One day there will be only 5-6 insurance companies, and they will be operated like utilities where they bid on territories. This is ultimately the goal of fascists.

  4. If carriers decide not to participate in the exchanges (because of all the onerous rules and the lack of a way to decide what is an “essential” benefit) you will not have exchanges.

    This whole thing could come out to where plans outside the exchanges are more competitive than plans inside. Brokers will still be able to sell but the MLR will make it far more difficult.

    We agents exist because their is a need for our services. Reinventing how a product is sold and done so by the government will be the latest in a series of recent dismal failures.

  5. I thought Janet was with AHIP/NAIFA?

  6. I am disgusted, I met with staffers from Claire McCaskill’s office a few weeks ago to complain specifically about the MLR. I explained that 80% of my business is individual health insurance and I make a modest mid-5 figure gross income. I told them my income was going to be cut 30-40% directly as a result of the MLR. Guess what they asked me? “Really? What do other brokers earn”? They were under the assumption that broker were rich. As if to say, they would only be concerned if I was a “poor” insurance agent and not a rich agent. Geesh. I wanted to vomit.

    I am an independent health broker and have been in the business for 5 years after 18 years in corporate mid-management. I got in the business after my company went bankrupt and I was declined for individual coverage. I KNOW how the real world works.

  7. I was at a daylong meeting on exchanges where both NFIB and NAHU were panelists and did very long presentations. I would say that NAHU is the only one still strong opposed to the use of navigators in exchanges, not NFIB.But to be bluntly honest, there wasn’t much optimism about brokers.

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