The Roller Coaster of Healthcare Reform

As a broker who specializes in employee benefits for small businesses, the past year has been a roller coaster of emotional highs and lows; wondering if the career I spent years building was going to be destroyed by healthcare reform.

Now that reform has passed, the terror still remains because so few people truly understand the value an experience agent brings to a client. It is especially frightening for brokers in states where commissions are fairly high because I think they realize that their compensation is going to be lowered in the near future.  Having survived the New York conversion to a guarantee issue state, I want you to know you are not alone and I hope that my experience can give you some insight and ease your transition.

I began my career in New York in 1982.  In those days, group policies were medically underwritten; clients could be rejected simply for being in the wrong industry and commissions were around 15%.  In 1992 I opened my first office.  It was the year that New York State moved to community rating.  Agents were no longer allowed to write individual policies, all policies were guarantee issued, rates were standardized for all group policies, and commissions were reduced to 4%.  It was also the year the Clintons proposed a public health plan. I can remember waking up at 2:00 AM turning on CSPAN and listening to politicians argue the pros and cons of a public plan vs. employer sponsored health care.

I looked to all the industry associations I had joined to see how they were advocating for agents and was frustrated to find out they weren’t.  Truth be told, most of their funding came from the carriers and that’s who they spent time defending.  Almost no one was talking about what agents do for their clients or how valuable we were. I was angry, very angry!  Every agency I had ever been a part of made a big deal about me joining these groups so they could be a “100% agency” and now where were these associations when I needed them? No where!

I went on the internet search for discussion groups (in those days they were called mailing lists) were I could find agents to talk to. I found two – RiskNet, which was more for property and casualty brokers and FBO (For Brokers Only) which morphed into several discussions groups for NAHU (the National Association of Health Underwriters).  It helped a lot to hear from other people in similar situations; hear other opinions; get ideas and emotional support.  I actually went on to form the current New York State Chapter of NAHU in NY.
What was a great help for me with my business was that with the reduction in commissions a lot of agents decided to give up the health insurance end of their practice. However, they worried about another agent meeting their client and losing the client all together. Since I only handled employee benefits, it was safe for them to refer their clients to me. I was also experienced enough to be able to open advanced cased for them if the opportunity arose.

I think the same thing will happen with the exchanges.  The law specifically states that agents will be allowed to sell exchange products and most likely we will be paid through the exchanges.  What will make it more attractive to use an agent rather than an exchange plan through the internet is the services we offer. The law specifically states that there must be an appeal process for denied claims.  Most clients are uncomfortable handling this. It is human nature and I don’t see it changing just because we have health care reform.

I am curious to see if the carriers will offer additional plans outside the exchange and how those will be priced or if employees will be allowed to buy individual plans that supplement the exchange plans.  I think voluntary benefits will be a big part of our future.  That is if you decide to stay in this end of the insurance business.

Selling health-related products is a service-intensive business. It requires you to know your products, know your clients, think proactively and put what’s best for the client ahead of your income to be successful. Not to mention, that every year in addition to trying to grow your book of business you have to resell your current book.  There are a lot of ways to earn a living in the insurance industry. Ask yourself if this is really what you want to do.

By Patti Goldfarb