Timothy Stoltzfus Jost, JD, Robert L. Willett Family Professor of Law at the Washington and Lee University School of Law, wrote in his Mar. 13, 2012 article "Implementing Health Reform: A Final Rule on Health Insurance Exchanges," available at www.healthaffairs.org/blog:
"The role of agents and brokers within the exchange has been hotly contested. Many agents and brokers have seen insurers cut their commissions in recent years and attribute the cuts to the medical loss ratio provisions of the ACA. They had hoped that they would make up for this lost income by playing a major role in marketing insurance to the millions of new health insurance customers brought in through the exchanges. The final rule contains good news and bad news for agents and brokers.
First, it seems likely that their role as navigators will be more limited than some might have hoped. Under the ACA, navigators will educate and inform health insurance consumers and assist them in navigating the exchanges. The final rule considerably sharpens the focus of the navigator program. Although agents and brokers can be navigators, the rule prohibits states from requiring navigators to be licensed agents and brokers or to carry errors and omissions insurance, typically carried by agents and brokers...
On the other hand, the rule recognizes that agents and brokers–including web-based agents (sometimes called private exchanges), but also traditional ‘mom and pop' agents and brokers–can play an active role in marketing exchange products. The ACA explicitly recognizes that agents and brokers have a role in marketing exchange products. Experience has shown that support from agents and brokers is vital if exchanges are to succeed."
Will Obamacare Lead to Fewer Health Insurance Agents and Brokers (a.k.a. “Producers”)?
Mark Newsom, MS, Director of the Division of Payment Reconciliation (Medicare Plan Payment Group), wrote in his Oct. 10, 2010 report "Health Insurance Agents and Brokers in the Reformed Health Insurance Market," available at www.achp.org:
"Health insurance agents and brokers, collectively called ‘producers' by insurance companies, assist consumers and small employers in choosing and enrolling in health insurance products...
The additional regulation of producers and alternative health insurance information (e.g., the online insurance portal) and assistance services available to consumers [under Obamacare] may limit the traditional demand for producers' services.
PPACA also has a minimum medical loss ratio provision requiring plans to pay rebates to their members if a certain percentage of their premiums are not spent on medical costs. This provision may provide an incentive for health insurance companies to reduce their compensation to and/or utilization of producers as they seek to reduce their administrative costs in relation to their medical costs."
Robert Miller, MS, MA, President of the National Association of Insurance and Financial Advisors, wrote in his Jan. 11, 2012 article "Obama's Health-Care Law Is Hurting Insurance Agents and Millions of Consumers," available at www.csmonitor.com:
"If you've never heard of the law's medical loss ratio (MLR) provision, you're certainly not alone. This simple calculation has had the effect of radically reducing what health insurance agents earn. That, in turn as greatly restricted their ability to help million of Americans navigate the maze of approvals needed for medical procedures and processing claims. It has also had a devastating effect on these agents' businesses and is disrupting the insurance market.
As agents deal with the consequences of the MLR, many are finding that the cost of servicing clients now exceeds their income. They are cutting back on services to customers and laying off support staff. Some are leaving the health insurance business altogether..."
The National Association of Insurance Commissioners (NAIC) stated in its 2011 report "The Comparative Roles of Navigators and Producers in an Exchange: What Are the Issues?," available at www.naic.org:
"In looking at the historical background of producers in the health insurance marketplace and issues surrounding the establishment of a navigator program under the ACA, it is clear that determining the future role of producers is a vital part of the implementation process for the Exchanges. States must consider not only what role producers will play in the start-up and day-to-day operations of an Exchange but how producers will work together with navigators to educate, engage and provide needed assistance to individuals, families and business owners. There are many issues in this regard, but experience has shown that all issues must be considered with the firm belief that producers, as well as navigators, can be crucial players in the success or failure of an Exchange... there are also segments of the individual market that are better reached and represented by producers rather than consumers or industry groups. Producers who are accountable and trained on the functions of the Exchange and the products and services available can increase public awareness of the Exchange and increase consumer traffic to the Exchange websites."
BlueCross and BlueShield of North Carolina wrote in its Oct. 17, 2011 statement "In the Spotlight: Health Care Reform and Insurance Brokers," available at www.bcbsnc.com:
"The Affordable Care Act (ACA) makes many broad, overarching changes to the way health insurance is purchased. New requirements on medical spending for insurers, exchanges, and changing roles for traditional health insurance agents will all contribute to a very different health care insurance landscape. Brokers will be at the forefront of these changes, as the primary actors between health insurance issuers and consumers...
Blue Cross and Blue Shield of North Carolina (BCBSNC) is supportive of brokers continuing to play their essential role in serving customers and businesses. We believe that health care reform must result in preserving this role and ensuring that the system enables brokers to adapt and thrive."