And let us not be weary in well doing: for in due season we shall reap, if we faint not. Galations 6:9
Health insurance agents don’t give up just yet. If you have felt frustration in the wake of Obamacare and are ready to quit, don’t. At least not right away.
Over the past few months, since the Patient’s Protection and Affordable Care Act (PPACA) was signed into law, I have been asked several times if there is a future for health insurance agents.
The PPACA seems to do everything possible to eliminate private health insurance. Our leftist president and his sycophants have heaped major burdens on health insurance companies. It seems the wealthy politicians cannot stand the thought of other people getting wealthy.
There are 2 provisions in the PPACA that will have a direct impact on health insurance agents. Agents, do what congress did not do. Read the bill before you do anything that you may regret in the future.
Medical Loss Ratio
First, the negative. The PPACA implements a new requirement on the health insurance companies called a Medical Loss Ratio. Those congressmen & women who actually read the legislation before voting on it, I think there might have been 3, will know that the term Medical Loss Ratio (MLR) is used several times in the 906 page legislation.
The MLR was not written to harm individual insurance agents. It is designed to allow the government to implement cost control on health insurance companies. Unfortunately, that provision of the new law is going to impact health insurance agents for the next 3 years. The military would call us “collateral damage.” It is a shame that we are going to be harmed but that is the cost for the “Greater Good”.
Essentially, what it does is change the rules after the game has already started. Until Obama, Pelosi & Reid used trickery to force the PPACA on us against our wishes, the last time I even heard of someone being accused of changing the rules to a game after it had started was on the grade school play ground over 40 years ago.
The MLR limits the amount of money the insurance company is allowed to charge for the administration of the risks they take. That section of the law requires all health insurance companies to trim their expenses so that 80-85% of the premium revenue they receive is used to pay medical costs. Congress and the president have determined the amount of profit a health insurance company is allowed to make without even considering the amount of risk they take.
On March 22 health insurance companies were allowed to use the open market to set their premiums. If they set them too high, they would lose customers. If they set them too low, they would run out of money and have to file bankruptcy.
On March 23 that all changed. Now the insurance companies will be told by congress how much they can charge for their premiums and what they can use the money for.
As agents, our commissions will be lumped into the 15% of premiums that have to pay for expenses other than claims. Our commissions have to come out of the same pool of money for the wages & benefits that insurance companies have to pay home office employees.
I have already received notice from all of the health insurance companies I am appointed with that my commissions will be cut in January, 2011. At least they are using the word, “cut” and not “eliminated.” When I start to feel sorry for myself I have to remind myself that it could be worse. I could be numbered among the thousands of home office employees who are going to lose their jobs in 2010.
Am I bitter? I would not use the word, “bitter.” I think a better word to describe my feelings is,”confused.” I am having trouble understanding why someone who brags about paying taxes on over $ 5,000,000 of income for 2009 pushed a law through that costs thousands of jobs and significantly cut the incomes of thousands of others. I am more convinced today then I was last year that the PPACA has less to do with helping people and is a calculated political move paid for by the U.S. taxpayers to allow one man to exert and maintain power. Could it possibly be that Obama does not want anyone else to have a lifestyle similar to his?
The PPACA appears to me to be exactly the same political trick the Caesars of ancient Rome used with their doctrine of “Bread & Circuses.” The difference is the Caesars did not use public money to pay for food and entertainment for the poor. They used their own money to buy power.
As I read the law, the MLR is only applicable to major medical policies for people under age 65. While there are some major changes to the Medicare Advantage plans in the PPACA the MLR does not seem to apply to Medicare Supplement insurance. Commissions for those health insurance plans will not be affected by the PPACA.
Health insurance agents who specialize in small group and individual major medical insurance may wish to brush up on their Medigap and Medicare D plans and adjust their prospecting accordingly.
Now, the hope. In the 906 page document, known as the Patient’s Protection and Affordable Care Act, is Section 1311. It sets up, in 2013, the new state health insurance exchanges. Buried in that section are instructions for exchanges to hire “Navigators” to help people with their health insurance options.
That sub-section reads as follows.
(1) IN GENERAL.—An Exchange shall establish a program under which it awards grants to entities described in paragraph (2) to carry out the duties described in paragraph (3).
(A) IN GENERAL.—To be eligible to receive a grant under paragraph (1), an entity shall demonstrate to the Exchange involved that the entity has existing relationships, or could readily establish relationships, with employers and employees, consumers (including uninsured and underinsured consumers), or self-employed individuals likely to be qualified to enroll in a qualified health plan.
(TYPES.—Entities described in subparagraph (A) may include trade, industry, and professional associations,commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused nonprofit groups, chambers of commerce, unions, small business development centers, other licensed insurance agents and brokers, and other entities that—
(i) are capable of carrying out the duties described in paragraph (3);
(ii) meet the standards described in paragraph (4); and
(iii) provide information consistent with the standards developed under paragraph (5).
(3) DUTIES.—An entity that serves as a navigator under a grant under this subsection shall—
(A) conduct public education activities to raise awareness of the availability of qualified health plans;
( distribute fair and impartial information concerning enrollment in qualified health plans, and the availability of premium tax credits under section 36B of the Internal Revenue Code of 1986 and cost-sharing reductions under section 1402;
(C) facilitate enrollment in qualified health plans;
(D) provide referrals to any applicable office of health insurance consumer assistance or health insurance ombudsman established under section 2793 of the Public Health Service Act, or any other appropriate State agency or agencies, for any enrollee with a grievance, complaint, or question regarding their health plan, coverage, or a determination under such plan or coverage; and
(E) provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange or Exchanges.
The unelected Secretary of State (another part of the PPACA that drives me buggy) who is appointed by the individual elected as President in 2012 will be the one who will make the final rules about the Navigator program.
That is 2-3 years into the future. There is absolutely no way that anyone can speak with any authority about the future of health insurance agents at this time. If someone attempts to say there is no future for health insurance agents, all he/she is doing is proving they have not read the law.
The only thing that is certain is that the duties of those of us who deal with health insurance in 2010 are going to drastically change by 2014. We will be paid differently and have to learn an entirely new product.
In light of the pending commission cuts it may be wise to add lines other than major medical insurance but I encourage agents not to give up on health insurance completely. The Navigator program may actually benefit us in the future.
As the Apostle Paul says (I know I am taking it out of its context.) “And let us not be weary in well doing: for in due season we shall reap, if we faint not.”