What is the future of the Health Insurance Agent?

You have probably planned a vacation in the past five years.  During that time you had the choice to use a Travel Agent or not.  Most of us did not.  ...Health Insurance Agents across the country who work in the Individual and Small Group markets are concerned that consumers will bypass them in a similar way after 2014.   Is that likely?  This article explores this question using analogies from other industries that have had to undergo similar changes.  

Background:  Starting in 2014, Health Care Reform requires that each state make available an Exchange, which is an (primarily) on-line portal for individuals and small groups to purchase health insurance with or without Federal subsidies.  There are 5 products that must be offered and each insurer must describe their products in a similar format.  No medical information can be used to decline or rate up an individual or group.  If a person needs help with their transaction they can call a person hired by the government called a “Navigator”.  There is the option of allowing private insurance to be available outside the Exchange with different benefits, but rates are pooled so there will be no price advantage for consumers to select plans inside our outside the Exchange.  (Note:  This is highly summarized for purposes of this article.)

Reasons why Health Agents will still be needed after 2014

1.    People will do their own shopping online only if they consider it a good use of their time.

In the case of travel, there are 3 reasons people shop online:  (1) There are far more options available to people via the internet than through a travel agent (2) There is more information about the options (pictures, personal unbiased testimonials, prices, etc.) (3) Many consider it an enjoyable activity.   

The same will not be the case with health insurance in 2014 once the Exchange is functioning.  By law, the Exchange will only include the insurers and products that it offers, consumers will have to go elsewhere to learn about other options. The objective for the Exchange is to provide data to help individuals make informed decisions on the most cost-effective, high quality providers and insurers. 

Even if done well, it is still likely that most people will consider personal references more important than any data on the internet to make their selection.  This is a cultural and trust issue (think about how you selected your mechanic, accountant, and dentist.)  In addition, if you have a health insurance agent before 2014 and you trust them, and it doesn’t cost you extra or reduce your options, you are likely to want to keep using them for advice and service.  Finally, shopping online for health insurance is not likely to be considered enjoyable, although it is likely that a consumer would explore the Internet and then contact their existing agent.

2.     Service and trust are important considerations

There will be a new level of complexity post 2014 as people become eligible for Medicaid or other Federal and State subsidies and want to know what options they have to maximize their health insurance benefits and minimize their penalties.  Here you might consider as an analogy the individuals and business owners who do their own taxes online (like TurboTax) vs. those that go to a CPA or lower-priced firms like H&R Block.  People make these selections based on cost, time, expertise, and trust. In the future world of Health Care Exchanges– all of these are considerations when you decide whether to go on your own or use a Health Insurance agent.  If there is a cost to using an agent or if there are less options, that will be a large deterrent*, but some people may consider it worthwhile if they feel they will benefit most with the service of an expert who can explain all their options and provide unbiased recommendations.  

In addition, if an individual considers the service of the Exchange call center (staffed by Navigators) to be inadequate they will be less likely to shop without assistance.  What this means is that Agents who are expert on the new law and all the options within and outside the Exchange will be in demand.  Classes offering CE credits will be important, or perhaps new certifications will be required or a new type of Agent designation will be created. 

3.  Agents must add value to Financial Products

CPAs and Real Estate agents are perceived to add value to a financial transaction.  They do this through saving money or time, as mentioned before, and also by reducing risk and acting as an advocate if issues arise.  Do Health Insurance Agents do this?  Now- definitely.  Health Insurance is a very complex industry.  Different carriers offer different products, have different rules and often use the same terminology in different ways.  Not all information is available on how things work, and people aren’t always sure that what they see is what they will get.   Facts change faster than even websites can keep track of.  Consumers trust that agents will help them avoid pitfalls and hidden “gotchas.”  

In the future, however, many of these risks will be mitigated through PPACA regulations.   What risks will remain?  A few come to mind: 

(a)    Frequent changes:  a new Exchange is bound to hit bumps and make changes frequently in the beginning. 

(b)    Extreme complexity:   assuming that competition continues, there will be changes in carriers, providers and plan options both inside and outside the Exchange likely involving items we haven’t even thought of yet.  When individuals and businesses only look at their health insurance once a year it is very helpful for them to go to a single source for the most current advice preferably one who knows their situation

(c)    compliance and penalties:  the new law creates numerous penalties and fines for non-compliance

(d)    Tax implications:  businesses in particular have many tax implications to consider that will likely be outside the area of expertise of a government Navigator.  

Based on these points, it is apparent there is still a need for Health Insurance Agents, but it will look a lot different in 2014 than today.  We, as agents, will need to carve out the more clerical tasks to Navigators and stay educated on the changes in law and continue to service and advocate for our clients.   In addition, we should use any influence we have to make sure the Exchanges are designed in a way that allows for competition, keeps private health care options available and doesn’t become a government bureaucracy.  One way to influence this is to join NAHU and contributed to their PACs.  Things are moving fast, so do it today!

*NAHU and its subsidiary organizations are working hard to avoid the following scenarios that would markedly impact the future of agents: (a)  people who are eligible for subsidies can only get them through the Exchange (b) there are no commissions for Agents when placing business through the Exchange.

About The Author

Jane Ames worked for a leading national Health Insurance company for 18 years where she was an underwriter, trainer and key participant in pricing system development and implementation in 11 states.  In 2010, Jane started her own business, Jane Ames Consulting which provides health care consulting, education and broker services to individuals and small businesses in Georgia.  She is also on the Board of the Atlanta Association of Health Underwriters.  In addition to an undergraduate honors degree in Mathematics from Clemson University, she has both an MBA and MHA (Masters in Health Administration) from Georgia State University.

This article was edited by Erica LaSalle, graduate of Georgia Southern University with a Bachelor of Arts in Writing and Linguistics and English.