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.

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State Round-Up

By Greg Scandlen

Next up in the struggle over ObamaCare are the states, which are expected to implement all of the garbage that came out of Congress. Unlike Members of Congress, the state governments are actually expected to know what they are doing. They don’t get to borrow trillions from the Chinese to hide their mistakes. And they are – what’s the word? Appalled? Dumfounded? Flummoxed? Aghast? – insert your own expression.

In any case, an article by David Lightman in the Miami Herald highlights many of the issues the states are dealing with, beginning with the insurance exchanges. Here California has already moved ahead with efforts to create an exchange, even though no one knows what the federal requirements will be or if the law will survive to 2014. But that’s okay, since California has lots of extra money to spend on frivolous things, right? In South Carolina, on the other hand, new governor Nikki Haley has no intention of spending money to implement an unconstitutional law, and the Attorney General of Wisconsin says after the Florida decision, the law is dead unless it is revived by an appellate court.

And then there is Medicaid expansion. Mitch Daniels in Indiana estimates it will cost his state up to $3 billion over the next ten years. We’ll be looking more closely at the Medicaid problem in a separate post.

The Republican Governors’ Association plans to “play a central role in organizing GOP governors against the law,” according to an article by Shane D’Aprile in The Hill.

The article also says,

Regardless of how the RGA’s effort shapes up, one potential GOP presidential hopeful is certain to play a leading role. Mississippi Gov. Haley Barbour, the outgoing chairman who helped raise record amounts of money for the committee this past cycle, is now the RGA’s policy chairman — a newly created position.

In that capacity, Barbour will be a high-profile liaison of sorts between GOP governors and the party’s leadership in Washington.

Haley Barbour is probably the savviest political strategist in the Republican Party today. It is doubtful he will go very far in the presidential race, but when it comes to finding the pressure points on a policy issue there is no one better.

The New York Times also discusses how the states will deal with the court ruling.  It writes,

“in a few states that are party to the litigation, Republican governors and attorneys general declared the expansive health care law effectively null as a result of the judge’s ruling. They suggested they would suspend planning and implementation until appeals courts could rule, although they did not provide details about what precisely might change or whether they would refund federal planning grants already awarded.

It quotes officials from Florida, Wisconsin and Idaho, but also says some Republican governors, especially Nathan Deal in Georgia, are more cautious. And, of course, Democrats like Vermont’s Peter Shumlin are “moving full speed ahead,” which is odd, since Vermont is also moving to set up a single payer system in that state.