Local insurance agents are keeping an eye on health care reform, but with a wide variety of competing proposals on the table, and the political shift resulting from the election of Republican Sen. Scott Brown in Massachusetts, agents aren’t too worried yet about what might happen.
“I’ve seen a lot of government plans come and go, and I’ve learned to keep my blood pressure down,” said Ted Andrews, vice president of corporate health for Springfield-based PJC Insurance and a 33-year health insurance veteran. “I spend more time reacting to what finally gets on the books than anticipating what I might have to do.”
Linda Welter, manager of the life and health department at Branson-based Connell Insurance agreed, noting that she is waiting to see what actually comes up for a vote. Agents do share a common hope, however, that once reform is in place, they will be able to continue in their roles as valued advisers to their clients.
An industry exchange A health care reform concept raised by both the U.S. House and Senate is the insurance exchange: a marketplace where all health insurance options would be sold, with a goal of standardizing plans and simplifying administration.
An exchange is basically “a single contact point where, whether you’re going to buy an open-market product, a private market product or a government product, you have to go there to buy it,” said Larry Case, executive vice president of the Missouri Association of Insurance Agents.
To some extent, the exchange concept reinvents what independent insurance agents already do: providing consumers with a range of coverage options from multiple carriers, Case said. Exchanges also would feature insurance pools for individuals and small businesses, providing greater purchasing power.
If exchanges were mandated, Case said, he would opt for the Senate version, which directs states to create their own exchanges. The House calls for a single federal exchange.
“I think (a single federal exchange) is problematic for consumers in that it won’t be as agile or as responsive to localized needs,” Case said.
The agent’s role If exchanges become a reality, local agents hope that there will still be a place for the expertise and services of licensed insurance professionals.
“I’ve not heard anybody’s discussion of the agent’s longstanding relationship with accounts in this whole process, and I don’t think it can be negated that easily,” Andrews said. The agent serves not only as a guide in negotiating the complexities of insurance, he said, but also as a client advocate and a resource for benefits administration and compliance.
“If the concept behind an insurance exchange is that you allow the employer to go and just do a shopping spree and find the best price that they can and turn them loose, the practical side of that is that most employers have got enough to do in running their own business and being an employer,” Andrews said.
Case noted there initially was concern that the House version of reform legislation would allow community organizations, such as not-for-profits, to access the exchange and place coverage on behalf of consumers.
“We felt that was problematic in that there was no licensing requirement that anyone accessing the exchange knew anything about insurance,” Case said. “So in the Senate version again there is a licensing requirement and it was clarified whereby if you’re going to place business through these exchanges, you need to have the same licenses you otherwise would have to have.”
Reform versus reality Connell Insurance’s Welter pointed out that getting coverage is only half the battle for health insurance. The real fight is managing the ongoing cost.
For instance, reform might cause small businesses that have never offered health coverage to opt into coverage for employees.
“But if all this comes about, and I am a small employer and I now have health coverage, will I be able as an employer to keep up with the cost?” Welter said.
In Massachusetts, where the insurance exchange concept was piloted in 2007, more people are now enrolled, but costs continue to rise.
Locally, Welter said, her clients’ renewal increases range between 8 percent and 50 percent. Andrews said he’s seeing increases as low as 4 percent and as high as 35 percent.
The trend is closer to 9 percent, which he attributes in part to a dramatic move toward higher deductibles. Deductibles of $1,500 to $2,500 are routine, and with high deductibles “people become much more conscientious about the utilization of health care services,” Andrews said. “That will drop the claims totals, and that will have a direct effect on renewal pricing.”
Practical reforms While the insurance industry is dubious of reform as proposed in Washington, it is not opposed to reform in general.
“We are not and have not been in support of the massive bills because we think they go too far and try to do too much all at once,” Case said. “We do support insurance reform; we support looking at the elimination of pre-existing conditions, we support improved portability, we support government support – creating mechanisms to provide subsidies to those persons who cannot afford it.”
Andrews, on the other hand, recommends mandatory disclosure legislation to spur competition among medical providers. He said that would allow consumers to comparison-shop for providers and services, and the resulting competition would lower costs.
“The two things that would right that ship would be disclosure of the quality outcome on the practitioners – who’s good and who’s not – and full disclosure of the costs,” Andrews said.
