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Posts Tagged ‘National Association of Health Underwriters’

Health Care Reform Means Changes for Brokers, Not Elimination

Posted by Alan on October 20, 2009

There’s a big difference between bending and breaking; between change and destruction. This is especially important to keep in mind when talking about the impact health care reform will have on insurance brokers. Some commentators, like John Goodman, president of the National Center for Policy Analysis, are quite emphatic in their doom and gloom. In an interview published in HIU magazine, Dr. Goodman states “Under any sort of exchange that’s being envisioned by Congress or the White House, there will be no broker.”

I disagree. As I wrote several months ago, my take is that “brokers will continue to be a part of whatever new health care system emerges.” My confidence rests partly on the herculean efforts made by the National Association of Health Underwriters and other broker organizations to include specific language in several of the bills moving through Congress that explicitly permit brokers to sell products offered in an exchange. But more importantly, I believe that even after the exchanges are up and running (probably in 2013) individuals and small business owners will still need the services of independent brokers.

Whether this need for brokers will survive health care reform will be determined to a large degree by two factors: the nature of the exchange(s) created; and the viability of the individual market. While it’s (unfortunately) easy to imagine an exchange that eliminates the need for brokers, the exchanges most like to emerge from the debate in Congress are widely expected to be much more benign. In my previous post I articulated a “Theory of Disintermediation.” This theory hold that “whether the Internet will eliminate distribution intermediaries depends on the interplay of six factors of the product or service being sold, specifically how:

  1. complex the product or service is to consumers
  2. frequently the product or service is purchased
  3. personal and critical the product or service is to consumers
  4. expensive is the product or service
  5. much on-site service is required to install or use the product or service
  6. easily a description of the product or service can be digitized.”

Exchanges are likely to simplify health insurance policies and bring some standardization to marketing material and the like. However, consumers are still going to have to make a decision concerning an expensive, complex product they infrequently purchase which is critical to their health and financial security. For small business owners the need for independent expertise will be even greater: they are making a decision that effects not only their own families, but those of their workers. That’s a responsibility most employers will feel reluctant to make without expert support.

Whether individual coverage remains viable is still uncertain. The danger is that while Congress will require carriers to sell coverage to all applicants, they won’t require all Americans to purchase coverage. The result is the equivalent of allowing motorists to buy auto insurance after they’ve had an accident. Few consumers would voluntarily buy such coverage until they need it. The result would be price increases previously only experienced in states like New York where this dynamic has resulted in a costly health insurance surcharge.

This may be naive and wishful thinking, but I do think there’s enough common sense in Congress to recognize the need to require all residents to obtain coverage before they show up at the doctors office or hospital. The American people seem to recognize this. A recent ABC/Washington Post public opinion poll shows a majority of those surveyed support requiring everyone to buy health insurance. Indeed, if subsidies are offered to low-income households, support for an individual mandate rises to 71 percent. So the political wind is there to help Congress create a fair and workable approach to this issue. And that, in turn, would go a long way to keeping the individual market viable.

So if brokers are likely to be part of the new world of health insurance does that mean it will be business as usual for us?

No.

The value brokers bring to the products we sell is likely to evolve. So will the way we’re paid. For example, helping consumers find the plans that best fit their unique needs will remain at the forefront of what we do. The reforms will make that part of the job easier. The reforms will make after sale service a bit more complicated as a new layer or two of bureaucracy gets added to the mix. (Only someone working in Washington DC will claim that adding a government agency, like an exchange, to the mix will reduce problems or make resolving them easier).

These are mere tweaks in the average broker’s day. The biggest, most fundamental change brokers will face is how they are compensated. First, brokers will likely be paid less per sale. Requiring everyone to purchase coverage is a two-edged sword. It dramatically increases the number of consumers buying health insurance. It also creates tremendous pressure to keep premiums low. Distribution costs are generally the second largest budget line for carriers trailing only claims costs. With everyone having to buy, reducing broker compensation for each sale is all but inevitable. This doesn’t mean producers won’t be able to do well under the new system. They’ll just have to do more. Given that 30 percent or more of the individual cases they work on today are rejected by carriers, reforms which assure all applicants are accepted will go a long way to offsetting this per sale reduction.

The second impact of reform is likely to be the end of the commission system. At the risk of being flamed by brokers reading this blog, paying us a percentage of premiums makes little sense now and will make even less sense going forward. The reality is that the cost and rewards associated with making a sale don’t relate to the premiums paid by the consumer. The biggest driver of health insurance premiums is the underlying cost of medical care and these cost increase far faster than general inflation. It’s not uncommon for medical trend increase at twice the rate of rent, supplies, phones, and other costs associated with running an agency. Linking broker pay increases to medical trend is a historical, but no longer logical, practice.

No one likes to talk about how they’re paid and the public policy issues involved. When’s the last time you heard a doctor publicly criticize the fee-for-service model – you know, the one that rewards them for maximizing the number of tests and treatments a patient receives without regard for the outcomes of those treatments? But to think that policymakers and carriers aren’t aware of this disconnect between how broker compensation is calculated and their actual costs.

Yet broker cannot work for free – nor should they. In the current system, carriers charge consumers for the brokers compensation and pass this revenue through to to the broker. It’s an efficient method and is likely to continue, but instead of commissions, brokers are likely to receive a flat fee per month per member. There may be regular adjustments made to the level of this fee to account for inflation, but it will be independent of the underlying premium.

Additionally, we’re likely to see the emergence of consultants in the individual and small group market segments. Instead of being paid through the carrier, these entrepreneurs will charge consumers directly. This is a less efficient method –- and is currently illegal in many states. But laws can be changed and the context for a new approach to producer compensation will be strong. We shouldn’t be surprised if new systems emerge.

And many consumers may find this pay for services system appealing. When California ran a health plan in the 1990s it imposed on a five percent of premium surcharge on small business owners wanting to work with a broker. Over 65 percent of the employers enrolling in the state plan paid the surcharge.

I believe Dr. Goodman’s warning that health care reform will do away with brokers is overstated.  And brokers need to remember, just because someone – even someone as bright and respected as Dr. Goodman – claims the sky is falling, doesn’t mean it is falling. It could just be changing.

Posted in Health Care Reform, Healthcare Reform, Insurance Agents, Politics | Tagged: , , , , | 18 Comments »

Health Care Reform And Mirror-Colored Glasses

Posted by Alan on August 17, 2009

There’s nothing wrong with looking at health care reform through mirror-colored glasses. It’s very human and downright American to ask “what’s in it for me.” In this country we’re all entitled to seek our self-interest. The role of government is to balance those interests, to prevent the excesses this approach can create, to find common ground that benefits the many while protecting the rights of the few.

A few weeks ago I was interviewed by a reporter for Marketplace, the business program produced by American Public Media that airs on NPR.  The interview was far ranging, covering the latest developments in the  health care reform, it’s impact on brokers and others employed in the health insurance industry and the like. (It was “far ranging” in the sense. as regular readers of this blog know, that the reporter was kind enough to indulge my penchant for expressing opinions about health care reform).

The  reporter, Joel Rose, is a frequent contributor to Marketplace and other programs. He did his usual job of providing an interesting, fair and accurate report. He certainly presented my comment fairly (which was about the likelihood lawmakers would be unable to maintain fair competition between a government-run health plan and private carriers).

Even  given all we talked about, I admit to being a bit puzzled by the Marketplace report’s  focus. The story, at least on the web site, is entitled “Aetna workers fret about reform plans” and mostly concerns the possible job losses health care reform could cause in the insurance industry. It seemed to me, at first blush, to be an awfully parochial topic. Who cares what reform does to those in the insurance industry?

Then I started getting emails and calls from folks who heard the story. They cared — and had the mirror-colored glasses to prove it. Further it became clear that  Mr. Rose had raised a significant question. Should policy makers working on health care reform be concerned about the fate of the roughly 500,000 people ho work in the insurance industry?

Some of those who emailed pointed out the irony that the Obama Administration was, on one hand, spending billions of dollars to create jobs on one hand, while, with the other hand, it was planning on spending billions of dollars to eliminate jobs in the insurance industry. (As Mr. Rose noted in the story, however, there will be new jobs created in a post-reformed health insurance industry).

Still, the question is,  should it matter? Should health care reform be designed to save job categories?

My answer, at the risk of getting flamed, is that the only jobs health care reform should protect are those who add value to the system. If insurance company employees or health insurance brokers or anyone else cannot justify the cost of their services, the government has no responsibility to save their careers.  The Declaration of Independence calls for protecting life, liberty and the pursuit of happiness. There’s no constitutional right to a particular career path — just ask a buggy whip salesman if you can find one.

The reason I work so hard on behalf of preserving a role for brokers in America’s health care system is because I believe we do add value to the products we sell. Even after reforms, consumers will need the advice and advocacy licensed professionals provide.  Just ask the small business owners who bought health insurance through a state-run purchasing pool operated by the state of California in the 1990s. Roughly two-thirds of them paid a surcharge for the benefit of working with an independent broker instead of dealing directly with the state. 

Which is why I find proposals by some lawmakers to empower Department of Motor Vehicle clerks to sell health insurance so insulting and misguided. DMV employees are fine, bright people. But they’re not trained to understand health insurance or to help consumers battle health care coverage providers (private or public) when necessary. Consumers deserve better.

That lawmakers fail to perceive the value brokers provide is, perhaps, disappointing, but not surprising. Many, having always been insured through programs for government employees have never worked with an agent. That’s why the efforts of the members and staff at the National Association of Health Underwriters is so important. They are working tirelessly to educate legislators about the role of brokers while also providing the producers’ perspectives on various health care reform related issues.

I testified before several Congressional committees on behalf of NAHU during the debate over Clinton Administration’s health care reform plan. At one I was asked what the Clinton plan would mean to insurance producers. I said the Clinton plan “was both bad news and good news for health insurance agents. The bad news is we’d be out of a job. The good news is our health insurance would be free.”

It was a clever line that drove home what was at stake for the committee member’s constituents who sold health insurance. But what I said then I believe now: health care reform should not be about protecting brokers or any other profession.  The purpose of health care reform should be to create a health care system that will benefit the American people for the long term, a criteria it is difficult to argue the status quo will do.

The Clinton reforms failed because they were ill-conceived and ineptly handled. President Barack Obama’s reform efforts will be successful because the need for change is more obvious and he is wisely willing to accept what is, from his perspective, a partial loaf.

The coming reforms will change the way brokers work, but will not, and should not, eliminate them.  Brokers should survive not because we have a right to, we do not. We should survive because American consumers view health care reform through mirror-colored glasses, too.

Posted in Health Care Reform, Healthcare Reform, Insurance Agents, Politics | Tagged: , , | 13 Comments »

Health Care Reform 2009: Even More Required Reading

Posted by Alan on August 11, 2009

Welcome to the third edition of health care reform 2009′s required reading list. (The previous editions were Health Care Reform 2009: Required Reading and Health Care Reform 2009: More Required Reading). What I try to do in these cleverly titled posts is to pull together the articles and web sties offering meaningful insights into the current health care debate. I don’t always agree with the authors facts, reasoning or conclusion, but having them available can be a useful guide to what people are saying and thinking.

  1. If folks are going to argue over what’s in the House Energy and Commerce Committee’s legislation (the “America’s Affordable Health Choices Act“) we might as well all read the darn thing. And the various press releases, summaries and white papers associated with it. The Committee’s site has it all and more.
  2. When the Congressional Budget Office talks people listen. (To be precise, when the CBO writes, people read — especially lawmakers, public policy wonks, the media and the political groups seeking to sway the outcome of the health care reform debate). One of their most read pronouncements concerned the impact of a government-run health plan to compete with private carriers or through a health insurance exchange under the Energy and Commerce Committee’s bill. The CBO concluded enrollment in a public plan or exchanges would be relatively modest — by 2016 they project “nearly 3 million Americans who would be covered under an employment-based plan under current law … would choose instead to obtain coverage in the exchanges because the employer’s offer would be deemed unaffordable and they would therefore be eligible to receive subsidies via an exchange…”  When part-time workers are added in, the CBO estimates that the private carriers would lose approximately 9 million people to the exchange by 2016. Estimating that a public plan would offer premiums approximately 10 percent lower than typical private plans offered in the exchange,  the CBO concludes the public plan would have a “limited effect on the the proposal’s net budgetary impact,” implying enrollment would be modest. The CBOreport is a thorough analysis well worth an investment of time.
  3. When it comes to polling, trends often matter as much as the actual numbers. The Kaiser Family Foundation has been tracking the public’s attitude toward health care reform since March 2007.  Their July 29th Public Opinion on Health Care Issues finds a majority of Americans continue to believe “it is more important than ever to take on health care reform now.” While the percentage has declined since October 2008 from 62 percent to 56 percent, that’s still a striking result given the rhetoric surrounding the debate. Of course, it all depends on who you talk to: roughly 70 percent of Democrats believe this is the time for health care reform while approximately 60 percent of Republicans state “we cannot afford to take on healthcare reform right now.” Independents split 54 percent-to-42 percent in favor of moving forward with change now.
  4. Just because you see it on television doesn’t mean it’s true. Partisans on the left, right and middle have a tendency to misstate the facts. FactCheck.org, a project of the Annenberg Public Policy Center is an excellent source for the real scoop. They take on liberals and conservatives with equal fervor, for instance, debunking the euthanasia claims of the right and challenging President Barack Obama’s claim that health insurance companies are raking in “record profits.” 
  5. During the presidential campaign, one of Obama campaign’s most potent weapons was a site called “Fight the Smears.” It allowed the campaign to quickly respond to and debunk unfounded rumors. The White House is launching a similar site, called “Reality Check” to counter attacks on the president’s health care goals. The justifications are not surprisingly skewed to the Administration’s positions, but as a single source for President Obama’s positions on controversial issues it’s a great resource.
  6. Keeping the health plans straight without a program is nearly impossible. Even with a program it’s darn tough. The National Association of Health Underwriters offers a useful comparison between the Senate Health, Education, Labor and Pensions Committee legislation and the House of Representative’s legislation (HR 3200). In fact, NAHU has a wide range of useful legislative information of particular interest to health insurance brokers. (If you’re a broker and not a member of NAHU, now is the time to join. No other organization is as engaged or effective at representing the perspective of professional insurance brokers.) The Kaiser Family Foundation ahs a great tool for comparing various health care reform proposals as well.
  7. Health care reform is critical importance to state governments. They simply cannot afford the burden of increasing medical costs for programs like Medicaid (Medi-Cal in California). California Arnold Schwarzenegger made this point very clear in a letter to Congressional leaders urging them to pass health care reform, but warning against pushing the financial burden onto state governments. It’s an aspect of health care reform that is not receiving a great deal of attention, but is of critical importance. The letter does an excellent job of explaining the issue. 

Of course the most important document to read is the Senate Finance Committee’s compromise proposal. Unfortunately, it doesn’t exist yet, although there are plenty of stories on what it is likely to contain. Until it sees the light of day, however, reports on its provisions are merely conjecture, trial balloons or both. In the meantime, these sites and publications should provide some pleasant summer reading.

Posted in Barack Obama, Health Care Reform, Healthcare Reform, Politics | Tagged: , , , , , , , , , | 11 Comments »

Health Insurance Exchanges Unlikely to Eliminate Brokers

Posted by Alan on July 14, 2009

The idea of connectors, exchanges, gateways and purchasing pools are far more than a fad, they’ve been around far too long. A purchasing pool was central to the Clinton Administration health care reform effort in the 1990s. They have been enacted in several states (although the California version, created in 1993, has since gone out-of-business). And they enjoy strong support across the political spectrum. That something akin to a connector, gateway, exchange or purchasing pool will be a part of whatever health care reform emerges from Congress this year is all but a certainty.

As with most concepts, the devil takes up residence in the details. Connectors, exchanges, gateways and purchasing pools are no exception. And it starts with what they’re called. There are technical differences among them, but for most purposes, especially political purposes, the distinctions are meaningless. So for simplicity sake, we’ll refer to all of them as exchanges.

What they are called, however, is unimportant. What matters is what they do and how they do it. I caused quite a few brokers some heart burn yesterday when, in passing, I wrote of exchanges “depending on how these are structured the only impact they may have is to crush innovation and eliminate brokers from the system.”  Insurance producers, quite reasonably, were concerned to read of this possibility.  So let me be clear: The bad news is that possibility is real. The good is that the possibility is far from certain.

Exchanges mean different things to different people. Some see them as replacing the chaos of an open marketplace with the structure of a regulator, controlled and confined market space. All health insurance products would be sold through the exchange. All health insurance carriers would be required to negotiate with the exchange concerning pricing and benefits. All information would be presented in a standard format with complete transparency being the ultimate goal. Carriers would compete solely on service and pricing. Consumers would come to the exchange to purchase their coverage. If they have questions they call or email an exchange employee. No independent brokers needed or wanted.

This kind of purchasing pool was central to the “managed competition” model of the Clinton Administration health care reforms. Fortunately for consumers and their brokers, this extreme exchange is unlikely to be a part of the final health care reform package.

At the other end of the spectrum is an exchange as an online information source. Think Orbitz, eHealth, Priceline or the like. The exchange does not negotiate with carriers nor does it set prices or benefits. It merely provides information about the benefit plans available in a region in simple, standard language. Consumers come to the site to research their options. If they have questions, and the sites online FAQs don’t suffice, the exchange lists resources local to the consumer – including and, maybe especially, independent brokers.

This kind of info-exchange is the least expensive for the government to maintain and the least disruptive of current distribution channels. There is a chance this is the kind of exchange will be a part of the final reform plan.

Odds are, however, what will be part of the final package will fall somewhere closer to the middle of the spectrum. The ultimate exchange will certainly provide side-by-side comparisons of various plans available in a local area. The insurance carriers have already expressed interest in establishing standard terminology and even common enrollment forms so this function will likely be non-controversial. The broad consensus seems to be that health plans should be available to consumers and employers outside of the exchange so there will be alternatives to the exchange. What’s not clear yet is whether the exchange will be given advantages. For example, Congress could decide premium subsidies will be available only to individuals buying coverage through the exchange.

Thanks in large part to the hard work of Janet Trautwein and her team at the National Association of Health Underwriters, brokers are highly likely to be explicitly permitted to sell products inside the exchange. The Senate Health, Education, Labor and Pensions Committee is refining their legislation which includes a “gateway.” This morning they accepted an amendment offered by Senator Orrin Hatch specifically identifying brokers as eligible to sell products within the gateway. Considering the Senate HELP Committee is staking out the most liberal position in the Senate, this is an important and significant development.

What has been most surprising – and disappointing – is the wide spread belief that the mere existence of an exchange will make it so easy for consumers to select the right health plan for their needs that anyone can assist them. Even conservative Republicans have put forward a proposal that would allow consumers to purchase coverage from their state’s Department of Motor Vehicles.  (The Hatch amendment does require entities selling within the exchange to be “licensed if appropriate.”) This reflects in part a political reality: if exchanges are to be worthwhile they need to reduce the cost of coverage somehow. One way to do that is to reduce the cost of distribution.

While it is true standardizing terminology will make health insurance coverage easier for consumers and employers to understand that doesn’t mean genuine expertise isn’t needed. We’re not talking about books sold on Amazon. You buy the wrong book and you’re out a few bucks and some time. Buy the wrong health insurance and your health and financial security is in jeopardy.

Even in Congress there is an understanding that one size does not fit all consumers. If your health insurance doesn’t fit you can’t take it to a tailor for adjustments. You live with your choices for some time. Orbitz may be a great way to compare the cost of air fare just as an exchange may make comparing the price of health plans easier. Data concerning health care is already easy to come by and an exchange may make it even more accessible. But data is not knowledge. That requires expertise and a deep understanding of the market. Which carrier is having service problems? What specifically does a particular consumer need from their coverage. What factors should be considered to assure the consumer is receiving the highest value for their premium dollars? The clerk at the DMV may be very bright and eager to help, but is unlikely to have the knowledge to provide meaningful advice. Qualified, licensed and professional brokers do.

What does this mean for brokers? First, those who are simply pushing paper, who fail to listen to their clients and provide expertise, who are adding no value to the products they sell will be out of business sooner rather than later. The exchange will see to that.

For brokers who add value, however, there should be a bright future. Their compensation will change, especially if all Americans are required to have basic insurance coverage. Fees may supplant, or at least stand alongside, premium-based commissions. As long as there are real options available to consumers in a competitive market place, there will be a need for advisor, counselors and advocates. There will be a need for expertise. Brokers who play these roles and who perform the alchemy of turning data into knowledge will prosper, even if new distribution channels are created by reform.

The market pays for value. Brokers deliver value. The existence of a health insurance does not, of itself, change this legitimate dynamic. Nor should it. The key will be what kind of exchange is created. It doesn’t matter what it’s called. What matters is what it does – and how it does it.

Posted in Health Care Reform, Healthcare Reform, Politics | Tagged: , , , , , , , | 14 Comments »

Health Insurance Brokers to the GOP: “Et Tu?”

Posted by Alan on May 26, 2009

Health insurance brokers are appropriately worried about the impact health care reform will have on their livelihood. That’s human nature. Politics is about the management of self-interest. When it comes to health care reform, the list of concerned onlookers is long. Patients, doctors, hospitals, carriers, government bureaucrats, health insurance agents, employers, lawyers, dentists, chiropractors, pharmaceuticalfirms and, well, you get the idea.  Anymeaningful change is going to require sacrifice by most all of these stakeholders. 

When it comes to balancing all these competing interests, the partisan nature of American politics usually comes into play. Public policy flowing from the Democratic party tends to benefit some at the expense of others. The same holds true with the Republican party.

Health insurance brokers, for example, tend to rely on the GOP to promote policies supportive of their profession. One reason for this connection is political. I’ve no empirical data, but long experience in working with health insurance brokers leads me to believe that the majority vote Republican. Another reason, however, is ideological. Republicans tend to support market-based health care reform solutions  and brokers are integral to making the market work. Brokers take competing health plans and interpret them to their prospects and clients. One method they use is to take the different explanations of benefits used by different competitors and put them into a consistent template. They serve as consumer’s advisers and, when needed, their advocates to assure they get full value from their health plans.

As President Barack Obama’s Administration works with the Democratic majority in Congress to fashion health care reform, many brokers are relying on Republicans in Congress to stand firm against a public plan (which most brokers believe would eventually drive private plans out of existence — and take brokers down the drain with them). And they are trusting Republicans will make the case for the value brokers add to the system.

This trust may be misplaced.

Last week four leading Republicans put forward “The Patients’ Choice Act.” The Act is their call to action for fixing what they refer to as America’s broken health care system while at the same time seeking to preserve much of the current market driven arrangement. The authors of the proposal, Senators Tom Coburn and Richard Burr and by Congressmen Paul Ryan and Devin Nunes, are leading voices within their party on health care reform. It’s not clear whether the Patients’ Choice Act is the official position of the Republican caucuses in Congress, but no other proposal has been forth by the GOP. And the media is certainly treating it as the “Republican health care reform plan.”

Not suprisingly, the GOP lawmakers explicitly reject a public health program. Indeed, while acknowledging other factors leading to runaway costs (new technology, an aging population) their document proclaims the primary reason America’s health care system fails so many patients is “government intervention.”

Nonetheless, there are several elements of the Patients’ Choice Act which occupy common ground with Democrats (more on these in a future post). Some of what’s in The Patients’ Choice Act summary is, suprising and even amusing. For example, Republicans have taken to accusing Democrats of seeking to move America to “European-style socialism.” Yet, in justifying some of their ideas the sponsors of the Act turn to similar programs working in — wait for it — Europe.

Some elements of the reform package are just foolish. For example, under the Patients’ Choice Act carriers to accept all applicants regardless of their health condition (often referred to as “guarantee issue”). However, explicitly reject requiring individuals to obtain coverage stating that “if individuals do not want health insurance, they will not be forced to have it.” In fact, they go so far as to suggest that individuals be able to purchase coverage at any time “through places of employment, emergency rooms, the DMV, etc.”

In taking this position it appears the the Republicans have adopted the greatest flaw in then candidate-Obama’s health care reform plan – and made it worse. Why would anyone purchase coverage before they need it? Any reasonable person would wait until they’re on their way to the doctor, stop by the DMV and purchase coverage. In case of an accident, all they would need to do is go to the emergency room (the most expensive place to receive care), sign up at the receiving desk and enter the facility as a fully insured patient. As soon as they’ve recovered, it would be safe to drop the coverage.

(I find it hard to believe the Republicans are taking such a naive view of insurance. And, to be fair, the Patients’ Choice Act is somewhat lacking in details. However, what I’ve described comes from the Republican lawmakers’ own document. If they are creating safeguards to prevent such gaming of the system, there’s no evidence of it yet.)

As with any health care reform proposal, there’s elements to like and to dislike in the the Patients’ Choice Act. What will be most troubling for brokers, however, is the GOP’s call for creating state-based exchanges. The benefits of such exchanges includes a “one-stop marketplace for health insurance. Individuals would get a hassle-free opportunity to choose the plan that best meets their needs through an Exchange.” Most brokers believe that’s their role in the current system. To have Republicans propose a state agency to take on this responsibility is disconcerting at best; a betrayal at worst.

Then there’s the “auto-enrollment” feature touted by the Republicans allowing individuals to obtain health insurance at the DMV and other locations. Apparently the GOP sees little value in having consumers work with licensed, regulated agents and brokers, not when there’s a clerk at the DMV available.

To be fair, the Republicans are not explicitly excluding brokers from their version of a new health care system. In fact, they are expected to remain a part of the system. In the GOP’s “Patients’ Choice Act Q&As they write, “Whether an individual uses an insurance broker, an internet [sic] comparison page, or calls a toll free number, individuals are provided the information needed to choose a plan tailored to their individuals [sic] needs.” This basically equates the knowledge, skills and expertise of  independent brokers to what can be delivered by an Internet site or a customer service rep at the state Exchange. How comforting.  Perhaps they are relying on the Exchange to standardize health insurance so much that professional guidance is no longer required. Although if coverage is that standardized, then perhaps calling their proposal the Patients’ Choice Act might be somewhat misleading.

The National Association of Health Underwriters, the primary professional organization for health insurance brokers, is working hard to educate lawmakers concerning the value independent brokers add to the system — value which should be preserved in whatever reform package emerges from Washington.  To the extent the Patients’ Choice Act represents Republican thinking on health care reform, relying on the GOP as an ally in this effort could be a painful path to disappointment.

Posted in Barack Obama, Health Care Reform, Health Insurance, Healthcare Reform, Insurance Agents | Tagged: , , , , , , , , , , | 9 Comments »

Health Care Reform: The Power of Stories

Posted by Alan on May 20, 2009

Facts are facts. Logic is logic. When it comes to health care reform, both are critical, vital elements of informed decision making. At the end of the day, however, facts are only facts and logic is only logic. What moves people are emotions and empathy. And what elicits emotions and empathy are stories. Stories are what enables people to connect data and logic with real, meaningful situations and they are what drives people to take action.

Chip and Dan Heath make this point in their book Made to Stick: Why Some Ideas Survive and Others Die. They point out that “stories have the amazing dual power to simulate and to inspire.”  By simulate they mean to describe reality and, consequently, convey knowledge.

Politicians understand this. So do successful sales people. A white paper is a great way to set forth a policy. A brochure may be just the ticket for describing an item. But it’s the stories that politicians and sales people use that connects those facts to people in a way the moves them to act.  President Ronald Reagan was a master of this. His reputation as the Great Communicator rests in large part on his ability to shape stories that inspired and moved his audiences. President Barack Obama shares this gift.

So it’s not surprising that President Obama is soliciting stories to post on his Organizing for Health Care site (which is a part of his grass roots organization, Organizing for America). It’s part of his effort to build grass roots support for his health care reform initiative. The email went to supporters of his campaign and others who have signed up at Organizing for America. It reads, in part: “As we know, challenging the status quo will not be easy. Its defenders will claim our goals are too big, that we should once again settle for half measures and empty talk. Left unanswered, these voices of doubt might yet again derail the comprehensive reform we so badly need. That’s where you come in.” It then asks his supporters to share “your personal story about the importance of health care reform in your life, and the lives of those you love.”

President Obama promises to personally read some of the stories submitted and he clearly intends to make use of them in the coming fight over health care reform. As he notes, “I know personal stories can drive that change, because I know how my mother’s experience continues to drive me. She passed away from ovarian cancer a little over a decade ago. And in the last weeks of her life, when she was coming to grips with her own mortality and showing extraordinary courage just to get through each day, she was spending too much time worrying about whether her health insurance would cover her bills. She deserved better. Every American deserves better. And that’s why I will not rest until the dream of health care reform is finally achieved in the United States of America.”

Facts and logic will play a major role in health care reform. But what ultimately will carry the day are stories like those of the President and his mother. Which is why others are also gathering stories.

As I mentioned in a previous post, the value professional, independent brokers add to the health care system is too often overlooked. The National Association of Health Underwriters, the nation’s largest organization of health insurance brokers and related professionals, is working hard to change that. In addition to attending endless meetings and submitting volumes of testimony and comments to Congress, NAHU is very appropriately gathering stories.

NAHU has created a web site, Brokers Making a Difference, to house the stories it has gathered. And more are coming in from NAHU members and the clients they serve. They tell stories of brokers going the extra mile for their clients when they needed help the most, after a serious illness or accident. They tell of brokers doing the straightforward work of being a counselor and advocate, helping their clients to find affordable health care coverage that meets their unique situation. They tell of brokers going beyond the call of duty and of those fulfilling their responsibilities as professionals.

For brokers these stories are critical. It’s one thing to talk about helping individuals or businesses through the health insurance maze. It’s another, altogether more powerful thing, to describe what that means in action. Stories of coming to the hospital to help a new mother whose baby was undergoing surgery to provide comfort, support, and, as important, assistance in dealing with the paper work have an impact. Stories of bringing together hospital and carrier administrators to get their clients out of the waiting room and into surgery have impact.

Brokers play a critical role in helping people maneuver through the health care system in this country. Health care reform is likely to become a reality this year. The stories President Obama is gathering will help see to that. It is the stories being collected by NAHU that will help assure brokers are able to continue to help their clients in whatever changed system emerges.

Posted in Barack Obama, Health Care Reform, Healthcare Reform, Insurance Agents | Tagged: , , , , , , , | 7 Comments »

Health Care Reform And The Value of Brokers

Posted by Alan on May 8, 2009

There are a lot of stakeholders in the health care reform debate. Patients. Doctors, hospitals and other providers. Insurers. Employers. And  so on. One often overlooked group with a great deal at stake in the current reform effort are health insurance brokers, especially those whose practices focus in the individual and small employer market segments. Today they provide some of the services expected of an exchange, helping to translate benefit plans into understandable options. Professional brokers go further, helping health care coverage shoppers find the plans that best fit their unique needs and then assisting them in gaining the benefits they’ve paid for.

The bad news is the media all but ignores the role of agents in the system. They focus on how confusing health care coverage can be (and it certainly can be opaque) and how consumers are at a disadvantage when dealing with their insurers (and they are) without once mentioning the counselors and advocates available to them: professional brokers. (Note added 5/9/09: An Associated Press article published today proves the point: it looked at the positions of the “10 groups with the mostinfluence, or most at stake, in the health debate…” Health insurance brokers were not mentioned.)

The good news is that lawmakers involved in drafting health care reform legislation are aware of brokers and what we do. They’ve sought out the National Association of Health Underwriters (the primary professional organization representing health insurance brokers) for testimony and input.

A seat at the table is great, but eventually brokers needs to justify their value to the system to those who live and work beyond the Beltway. If the media and public are unaware of what brokers do lawmakers can ignore agents with impunity. Which is why NAHU is launching a grassroots campaign to educate decision makers and opinion leaders to show why brokers “can’t be replaced by a government-run call center.”  Core to this intitiative is a white paper focused on the value of licensed producers. Titled “Americans Deserve Access to Professionally Licensed and Trained Health Insurance Agents, Brokers and Consultants,” the report describes the various services producers provide to consumers and how they compare to alternatives such as government call centers.

The challenge facing brokers is that we are, at the end of the day, overhead. We don’t heal the sick. We don’t deliver medication. But that doesn’t mean professional producers aren’t valuable. Whether health care in America is managed by private enterprises or government agencies, there’s more to health care than stethoscopes and MRIs.

The NAHU white paper does an excellent job of laying out the important role producers play in helping Americans get the most out of their health care coverage. For instance, it cites a study by the Center for Studying Health System Change that noted “In contrast to the notion that brokers merely make insurance more costly, these findings suggest brokers can provide important benefits to small employers, plans and policy makers.”

This sentiment is echoed by the Congressional Budget Office, cited in the NAHU report, which concluded that, especially in the individual and small group market segments, producers “handle the responsibilities that larger firms generally delegate to their human resources departments — such as finding plans and negotiating premiums, providing information about the selected plans, and processing enrollees.” In fact, the CBO recommends that “because many small firms and individuals may find brokers’ services valuable, policymakers might consider allowing such services to be used in conjunction with [a buy-in option to FEHBP].”

Too often those policymakers look at health care too narrowly. The technology sector shows how misguided this can be. In his book Marketing High Technology, venture capitalist William Davidow describes the difference between a “device” and a “product.”  A device, in an IT context, is a piece of code or some hardware. It’s what is invented in the laboratory. Products, however, goes beyond that. “A product is the totality of what a customer buys,” writes Mr. Davidow. “It is the … service from which the customer gets direct utility plus a number of other factors, services , or perceptions, which makes the product useful …” (emphasis added).

Medical care is obviously the core service (the equivalent of the “device”) when it comes to health care. Staying healthy or getting well is the ultimate goal. But the health care system is about far more than what happens in the doctors office or a hospital. It’s the development of new medications and devices, it’s healthy living education, and it’s the expertise provided by professional health insurance agents, brokers and consultants.

Health care reform is coming. That’s a good thing. In shaping what that reform accomplishes, lawmakers would do well to look at the system holistically — as a product, not just a device. That includes, as the NAHU white paper shows, acknowledging and preserving the value brokers provide to their clients.

Posted in Health Care Reform, Healthcare Reform, Insurance Agents, Politics | Tagged: , , | 17 Comments »

 
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