The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Why Brokers Will Survive Health Care Reform’s MLR Provisions

Posted by Alan on October 22, 2010

Yesterday I wrote about the National Association of Insurance Commissioner’s decision not to exclude broker commissions from the calculations carriers will use to determine their medical loss ratio as required by the Patient Protection and Affordable Care Act. Some brokers have indicated, on this blog and elsewhere, that this result spells certain doom for brokers.

I respectfully disagree. And I had started to draft a post explaining why. The post was going to revisit an explanation I offered once of the math that will drive broker calculations. Then I was going to note that many carriers offering small group and individual coverage were already fairly close to meeting the PPACA’s medical loss ratio requirement. And finally I was going to highlight the expenses currently treated as “administrative” by carriers that will now be either excluded from the calculations (e.e., many taxes) or that will now be reclassified to the “claims” side of the calculation (e.g., quality improvement and disease management programs).

But then I read a comment to yesterday’s post submitted by Ann H. setting out her perspective on the impact of the NAIC’s decision on brokers. Knowing that not everyone visiting this blog reads the comments I wanted to give her statement the prominence it deserves. That this spares you from wading through my math calculations is an added benefit.

So here’s Ann’s comment. Other than correcting a spelling error or two, it’s presented as she wrote it.

I didn’t know about these facts, Alan, and thank-you for telling us. But even before I read this, I can tell you that I wasn’t overwhelmingly disappointed that broker commissions were not removed from the MLR.

I guess there are 2 reasons. First, I expected it, so I’ve already crossed the bridge of disappointment and even fear. On 3/23/2010 when President Obama signed the law, I realized that my commission would be squeezed, and my business would suffer in other ways including a reduction in the number of carriers, frustration of my clients, higher premiums that puts further pressure on my book of business and so forth. I guess I’ve already dealt with this emotionally and logically.

The second reason today’s news about broker commissions didn’t affect me much is because there are other factors involved. One of my carrier reps said this to me several months ago — he said, “Half of the commission rate on double the premium is still the same amount of income.” He also said, “half the commission rate on twice the clientele with half the work due to guaranteed issue is still the same income.” And he also told me that the insurance company he works for was planning to keep premiums and expenses at much the same rate as they had done before anyway. He said that once 2011 is over and the accounting is done, if they find that they must make rebates to customers, then they will rebate. But they aren’t going to freak out now.

I think, “don’t freak out yet” is a good idea. Another of my carriers told me that they aren’t going to make major changes in business practices until the election is over, and they’ve analyzed the result. And even then, they expect more modifications to the rules on the national and state level. They don’t want to make drastic changes now that affect their position in the market, their position with brokers, and their public relations. They said 90% of their business is driven by brokers, and they can’t afford to replace the workload brokers provide for that 90%. They would actually survive better by paying a rebate than by manning and maintaining workers to replace brokers, then watching their backside for loss of sales due to the deletion of sales brokers.

Cutting broker’s commissions is a balance walk. If one carrier cuts deeper than others, sales may severely diminish for that carrier. Carriers can’t afford to lose fresh input of new customers and be left with an aging risk pool!! I’m not saying broker commissions won’t suffer. They will. But to what extent they suffer is an important issue. And how long the commissions will be at the floor before economic realities make them rise is another issue. I remember when group commissions were cut from 10% level to the 4-6% they are now. It came at the same time as the HIPAA laws with Portability and Guaranteed Issue for groups. Premiums spiked, commission percentages decreased, but after the initial drastic dip it all equalized to be the same amount of income.

There are other balance walks insurers must make. If brokers go out of business, who will service the client? Some NAIC commissioners said they expect their consumer complaint departments to have triple the amount of work if brokers aren’t fielding questions and finding resolutions. That’s what the States think. How about insurers? What strain will there be on insurance company customer service departments if brokers leave the business? How will insurers pay for the administrative expense of those customer service departments when they must meet 80% MLR? Isn’t a larger customer service department just as expensive as broker commissions, and don’t they both affect the MLR? Another thing to think about is quality of service. If an insurer cannot compete based on underwriting, or creative benefit structures, or even premium outside a specified range controlled by the government, then competition on the basis of quality of service is paramount. The amount of money an insurer has to spend on it’s administration and customer service departments is squeezed by the MLR. Will our insurers’ service departments be manned in India or the Philippines? The need for brokers is actually larger now than ever. Maintaining Service Departments is a fixed expense of wages, benefits, office space, overhead and taxes. If insurers were able to replace us with in-house service departments they would have done it a long time ago, trust me. We are less expensive.

Granted, not every broker can survive the dip that will come until things equalize again. The dip may be drastic, especially in some markets. But if you can see past the temporary into the inevitable, you can see light. Some of the things in the PPACA are just not functionally possible. It’s inevitable that the functionally impossible will fail and a solution will rise.

My thanks to Ann H. for sharing her perspective and insight on this issue with readers of this blog.


26 Responses to “Why Brokers Will Survive Health Care Reform’s MLR Provisions”

  1. Chris said

    Chapter 13 anyone?

    • The only way to make it right now is to bundle and cross sell your clients, add term life insurance, critical illness, accidental policies, and health insurance and go with those that pay 12 month advance. Look at the bright side we are now forced to give clients the best of the best when it comes to insurance. I do not care about what any body says if you do this you will make more money and protect your client from any gap in coverage.

  2. Ann H. said

    Meg, you said, “I’d rather make lemonade than suck on lemons any day.”. What a wonderful statement!!! Another statement I admire is, “As long as I continue to offer service to my clients AND I’m “reasonably” compensated, count me in!”. And what a wise move it is Meg, to be a resource of knowledge about the effects of Health Care Reform, and in so doing to pick up extra clients. Yes!

    Remember when HSA’s came in? We all realized we would spend quadruple the time explaining the concept for half of the premium. But we did it, because we are professionals, and it’s in the best interest of our clients to serve their needs. A professional who serves the need makes much more money than a sales person selling the highest commissioned product. Retention. Client satisfaction. Client request for other products. Referrals. Referrals. Referrals. Word of mouth.

    Malcolm Cutler’s response on the prior page said, “…the realities of “all” of the changes often times actually create more opportunity than downfall.” It’s to that end, that I try to light a path to “more opportunity than downfall”.

    I’m not ignorant, however, of some sink holes in the path. Curt Cella says he drinks in optimism and I admit that sometimes I drink in pessimism. We need to be informed about every facet in order to sort this out. I’d rather hear a “pessimist” realistically, factually (and respectably) point out the “good the bad and the ugly” than meet the bad and ugly in the dark. That’s one reason I keep reading this blog. Alan’s insight is extraordinary, and his maturity and experience are trustworthy. Other commentators on this blog have also taught me a lot. Curt Cella, I admire some of your well-written responses recently, and I’ve learned a lot from you. Spencer, you’re a man of great insight, with substantial wisdom. I said once, “what affects you, as my colleague, affects me.”, and that includes the affect of hurt, disappointment and anger. We sincerely want you to succeed, Curt. Sincerely. We sincerely care about those who feel thrown under the bus. Rick, Vince, Scott, Robert, David, Jeannette, Malcolm, Curt, Spencer……, thank-you for walking through this maze with me, and commenting in ways that help us see clearly. I want to know the bad and ugly as well as the good, so I don’t fail. However, I want to know what I can do about it, how I can succeed through it, over it, under it, around it. Otherwise why would I read this blog? Why should I keep coming back unless it’s helping me succeed? For the pessimists among us, why do you keep reading this blog and keep coming back? If you really thought your career was over, you’d be selling annuities by now. You’re coming back to learn, to gain insight, to see a light, to find your way through the maze, and to (hopefully) find success on the other side. We’re in this together.

    Let me first of all acknowledge some of the pessimism. I do think California, Washington, Oregon, as well as North Eastern states suffer more from a liberal foundation than Arizona where I reside, Texas where other commentators reside, and so forth. I do think producers of mostly individual/family plans will suffer more than producers of mostly group plans. I do think the dip in commissions will be more drastic to those accustomed to 20% 1st year and 5% renewal contracts, rather than 10% like I’m accustomed to for IFP and 4-6% like I’m accustomed to for group. I do think exchanges in varying states have widely varied effects. I do think “the People’s Republic of California” (oops, is that name calling??? smile!) has veered widely to the left. And yes, I do think all you boys should get along…

    But how many opportunities realistically exist in Meg’s “lemonade instead of lemons” concept? Can we count the ways?

    * Pick-up of clients who went direct, and now don’t get customer service from the insurer
    * Pick-up of clients confused about HCR who want your guidance
    * Pick-up of group clients with new tax subsidy incentives
    * Pick-up of clients when you hold a seminar to speak on HCR
    * Pick-up of clients when you hold a seminar to speak on tax subsidies
    * Pick-up of clients whose broker left the business
    * Pick-up of clients whose broker knows nothing about HCR
    * Pick-up of clients when you buy a broker’s book of business because he/she is leaving the business
    * Pick-up of clients when you send informative e-mail newsletters about HCR (careful, be very professional and not slanted toward an agent’s viewpoint or you’ll lose the client’s trust)
    * Referrals from satisfied clients whose friends need HCR guidance
    * Referrals from Pediatrician’s offices for children who need Guaranteed Issue now (yes, I know it must be on a parent’s plan, not “child-only”)
    * Pick-up of clients who had Principal Financial, which recently exited the market, and are given an offer by UHC (at a higher premium than if you underwrote it)
    * Pick-up of clients who had American Community, which recently failed, and are given a transfer offer (at a higher premium than if you underwrote it).
    * Sales in other states than California. Some commentators said, “move to Texas…”. Well, you can sit in your office in California and sell in Texas. (uuuuhhhmmmm, just don’t sell in Arizona okay? smile!)
    * Sales in group insurance if you’ve been accustomed to individual/family plans
    * Sales in dental, life, disability…
    * Write a PROFESSIONAL manual on Health Care Reform for those with specific interests and sell it (specific interests include businesses, parents with sick children, etc.)
    * Set up a website that’s professional and informative, drive leads to your quote engine for Individual/Family plans.
    * Set up multiple websites that people would search for, including with the words “exchange” in them, and drive the traffic back to your main website and your quote engine. Be careful to be professional and to make it clear the states’ exchanges are not running yet and you are giving an alternative by quoting private insurance plans. Lots of people don’t know the exchange isn’t operational yet, and they are googling it.
    * Talk to employers & individuals about Long Term Care, now that the CLASS ACT is an issue. Know the frailties in the CLASS ACT provisions, and market products that meet and beat it.
    * Offer guidance to your insurers, from an agent’s standpoint, join agent advisory boards that most insurers have. I’ve found that the insurers intently listen to us on those boards, and actually use our input to formulate business plans. Also, those insurers are politically active in HCR and its modifications, so get your voice in there.
    * Contact every employee in your groups, create a trust relationship, in anticipation of 2014 when they might make decisions independent of their employer’s group plan.
    * Know the exchanges inside and out, be a resource, get the commission if your state exchange is offering it, possibly charge a consulting fee if they are not, and become licensed in states that have better exchanges and better laws (not Arizona, okay guys? smile!)
    * Set yourself up to be a volume producer. Get a website, make it high in the search engines. Get two websites. Educate yourself on websites, search engines, blogs, electronic newsletters, etc., to reach generation X and Z. Plan to become a volume producer. You’ll be spending so much less time in underwriting (if 2014 brings guaranteed issue), and you’ll have more time to sell.
    * Use Twitter, Facebook, LinkedIn to set yourself up as an expert in HCR, tax subsidies, exchanges, etc. Ninety Six percent of shoppers under 30 use this method, not our “old folks” ways.

    Can you count more opportunities to succeed?

    • Josh P said

      I do more reading than posting, but this is an excellent post. The “doom and gloom” is getting quite out of hand, and it’s refreshing to hear other more positive dispositions.

      To the doom and gloomers, relax…have a glass of wine, and realize that you’ll either do one of two things:

      1) Adapt and succeed
      2) Fail

      Get a grip folks, there is ample opportunity in the near future.

  3. Meg McComb said

    I look at it this way–just like patients consult their doctors more when they’re anxious about the state of their health, so insurance clients are consulting their brokers more than ever. As long as I continue to offer service to my clients AND I’m “reasonably” compensated, count me in!
    I can’t be the only broker who’s receiving dozens of this phone call–“Could you please make some sense out of what this reform means to my group and me?” I’ve taken over Broker of Record solely because I’ve been able to answer that question for a business owner.
    Whenever I’m asked to make a presentation on tax subsidies for eligible small groups, I say “yes!”
    I’d rather make lemonade than suck on lemons any day.

  4. Rick said

    Ann wrote: “isn’t a larger customer service department just as expensive as broker commissions”

    Agents/brokers only receive commission when a sale is made and the customer pleased enough to renew. Company employees get paid ever increasing salary, plus benefits, regardless of how they spend their time during working hours. For this reason I would think agents/brokers are less expensive, and more efficient. If this theory is incorrect insurance companies would have terminated the use of agents/brokers long ago.

    Ann that was an excellent post, and looking at this issue from the group side, I agree.

  5. Robert Lehrer said

    As usual, your blog is compelling Alan. It’s reassuring to think that HCR won’t wipe out health insurance agent commissions

    One thing that I am still concerned about in California though, is the effect of the health insurance exchanges on brokers. You readers in other states may not realize it yet, but exchange counselors in California won’t have to be licensed agents. I’d like to know your take on the exchanges and their effect on agents, Alan.

    • Alan said

      Robert: Thanks for the kind words. As for California’s exchange, there’s definitely cause for concern, but not dispair — at least not yet. Curt Cella, in the comment right below yours, does an excellent job of presenting the concerns many brokers reasonably have concering the exchange in California. I respect his opinion and, at the end of the day, he may be right.

      But the exchanges haven’t been established yet. And as I noted in a post dated September 30th, the Legislature will consider bills amending the exchange structure next year. And there are mountains of regulations yet to be written. I believe at the end of the day, brokers will have a role to play in selling plans within the exchange. I also believe there will be a robust market outside the exchange.

      Whose right? Hard to say at this point. As with so much of the health care reform legislation, there’s more unknown than known about how things will ultimately play out.

    • Meg McComb said

      It’s realistic to be concerned about the affect of the exchange on brokers in California. Perhaps adversity is really an opportunity in disguise. The California Association of Health Underwriters (CAHU) has a members-only program called Adopt A Legislator. Over a period of time, a broker can help make a difference in how our state legislators implement the many facets of HCR. Step by step instructions appear on our website ( on how a CAHU member can establish a relationship with his or her state representative.
      Doubtless, other NAHU chapters have similar programs. The NAHU website provides links to all fifty states.

  6. Curt Cella said

    Can’t we all just get along….?

    Alan and Spencer I have to say I am shocked and dismayed by the discourse between you two gentlemen.

    Alan – no one should be allowed to hijack your blog for their own agenda. It’s your blog and your hard work.

    That being said: It IS hard to not see how the business of health insurance and the subject of politics and government are not inexorably linked moving forward WHENEVER one discusses this subject matter. I don’t believe that is Spencer’s “fault” but rather the fault of our President and his Congressional cronies. Alan and Spencer: I have tried very hard to think of one other industry. Just one other that was held out for annihilation by the stroke of a pen by a sitting President like our profession has been.

    With the Affordable Care Act, the President and our Congress established the Insurance Exchanges which will devastate the role of insurance agents as we know it. No disrespect to Ann but I just simply cannot fathom her commentary or yours Alan as it relates to what we do when you factor in the dawn of the Exchanges like the one we’re going to have here in California.

    The single BEST hope Agents have is a statement of commitment for our profession by the President or someone at the highest levels of government that commits to a review of what we bring to the table and a commitment to letting us actually have a seat at that table.

    Alan I am very sorry you cannot tolerate Spencer’s commentary here and I see the root cause of that intolerance as lacking a true notion of the level of disgust and revulsion many of us feel about being productive members of society and having an honorable profession and seeing that profession taken away as though our property (our career) sat in the way of where the government wanted to build a railway. What our President and our Congress have done to us is simply the worst kind of eminent domain imaginable because it didn’t have to play out like this. The government could have factored in the value we bring to this process and kept us part of the process. Instead they actually seemed as if they saw our home on the horizon and purposely pointed their bulldozer in our direction. Didn’t have to go down like that Alan.

    But yet it did. Now our President compounds the problem by twisting the knife: He openly says this was a rush job and that they wanted to ‘get it done and move onto the next thing’. Alan: These are people’s lives we’re talking about here and throwing tens of 1000’s of insurance agents under the bus for the ‘greater good’ is a simply horrifying notion to many of us who are American and believe our country is great by virtue of it being AMERICA.

    Alan you may not like how Spencer says it but I sincerely hope you create an understanding within yourself that Spencer didn’t create this situation but rather is simply voicing his outrage that this nightmare could have been allowed to happen and – in my opinion – is justified in linking politics and the subject of health insurance at every single turn because – quite frankly – the United States Congress and our President seem to have sworn a vendetta against each and every one of us.

    Ann – thank you very much for your words of optimism. I drink in any optimism on this subject like a thirsty man who has been walking for 1000 miles behind Lawrence of Arabia’s camel. Unfortunately I think I know all too well that insurance companies understand they are tied to us until 2014. At that time it’s gonna be every man for themselves and all bets are off. They will tell us what we all want to hear in 2010/2011 because that is the smart business call but don’t kid yourself: While they are hugging us and whispering sweet nothings in our ear they are looking over our shoulder at the next pretty girl in line whose name is California Health Benefit Exchange.

    • Alan said

      Curt: Thanks for your comment. Just a couple of things I want to clarify. My concern about Spencer’s comments was not their substance. And I fully understand his (and yours and others’) anger at the health care reform legislation. As any reader of this blog will see, I am not a fan of the legislation either. While I think aspects of it are positive and beneficial, there’s a whole lot that’s not. However, I also don’t think the bill is final. Regardless of the outcome of the election on November 2nd there will be legislation passed that modifies the PPACA, and I believe it will modify it for the better. There will be regulations promulgated that improve the bill. Will the end result be better than the system pre-reform? I don’t know. And being an optimist, I’m willing to wait and see.

      As readers of this blog also know, commentators often disagree with one another. I think that give and take is an unmitigated good thing as it illuminates the issues far brighter than bland and universal agreement would. What I am becoming increasingly less tolerant of in the world at large, however, is the tone the debate. Namecalling, labeling, attributing evil intent on the other side illuminates nothing. Quite the contrary, it ends debate because it diminishes the other side to something less than human, less than valid.

      People can disagree — and disagree forcefully — without resorting to simplistic name calling. If someone feels the need to call President Obama or President Bush or anyone else names, there are plenty of forums eager for their postings. This blog, however, is not one of them. What’s needed today more than ever is civil debate focused on issues, ideas and perspectives. That’s the kind of forum I am trying to provide here.

      So I understand the anger expressed by Spencer and others. And I’m happy to have comments expressing that anger from Spencer or anyone else as long as it’s expressed civily.

      • Curt Cella said

        Alan you raise an interesting point about the name calling and simplistic approach to complex issues. I too am sick of both. Yet each and every moment of each and every day I have to bear witness to political advertising that not only resorts to the very things you’re railing against but basically also insults the population at large by insinuating the voting public is simply too stupid to comprehend any other approach.

        The sad fact of the matter is that the Democratic party – led by our President (And I want to emphasize the word OUR in this statement) – led a very deliberate effort to demonize what members of our professional community do for a living. They are so dismissive of our industry that they have given the go ahead to a state exchange here in CA that won’t even hire professional licensed insurance agents to act as ‘navigators’ (BUT we’ve been over that time and again and I won’t beat a dead horse on that one.).

        I think you’ll find that guys like Spencer and myself are actually the first to stand up and say these are very complicated industry and societal issues and they demand more than just a slap stick approach at Congressional legislation that so far has been way off target (Child only policy anyone…?!).

        Did we need a stop to rescission? You betcha! Do we need a more aggressive approach to preventive services? Yes; absolutely! But while trying to fix some things they simply broke others:

        • Child only has virtually disappeared.
        • Federally funded high risk pools? An absolute outrageously priced joke. IF 400 some odd folks in California have that insurance I’d say we just found 400 millionaires. It is simply unattainable for the average Joe so really: What did that accomplish?
        • The mandate for buying insurance or risk a “fine”? The fine is an absolute joke Alan: I can’t count the number of folks I talk to who simply won’t buy a plan. They’d rather have a bigger TV or when they look at as catastrophic level coverage they’re quite simply willing to play the odds. They’ll gladly pay their $100 buck fine or whatever it is – and it won’t even be actual real money to them either – it’ll simply get deducted out of their tax return.

        In short, Alan, there are so many holes to all this that it is an insult to the intelligence of anyone with a functioning brain stem but yet we have a political machine functioning in this country that simply waves off the public dismissively and does whatever they feel like because, well….they can. The simplistic approach is actually – tragically – being foisted on our society by our elected officials. The President himself has said he/the Admin didn’t do a very good job of explaining the new legislation to the American people. Geez Alan: IF you really need to explain it to us dummies how good can it be? The American people understood Social Security. The American People understood Civil Rights. But we’re just too dumb to get this? Therein lies the problem Alan: Without meaning to; the President and his Congressional allies always seem to talk down to us – it’s like a twitch – they simply can’t help themselves.

        Alan I guess with your background you come from the perspective of the folks we see on C-Span who start each comment on the Senate floor with….”My good friend from….” Maybe Spencer is just a guy who’s ready to break some eggs to make the omelet. I don’t know Alan, but it sure would be nice to see someone representing our profession who was actually breaking some eggs and asking for some accountability on all the wreckage caused by one really lousy piece of federal legislation that liberal states like California are only too happy to mangle even more as they twist it into something as closely akin to Canada as they can make it.

        • Alan said

          Curt: Thank you. I think your post symbolizes the problem concerning civility in political debate and ably demonstrates how one can forcefully present an opinion without descending into name calling, lebeling and the like.

          You start off your comment accurately describing name calling as “simplistic.” You then lament that the political attack ads polluting our airwaves too often “insults the population at large by insinuating the voting public is simply too stupid to comprehend any other approach.” Then, however, toward the end your comment asking if comments on this blog that do the same are simply from folks “ready to break some eggs to make the omelet.” And you lament the lack of “someone representing our profession who was actually breaking some eggs.”

          Maybe I’m misinterpreting or oversimplifying your points, but you seem to be saying that demonizing the opposition is a bad thing, but you tolerate, if not applaud, folks who do it for “our” side of the argument. This is a common and almost understandable conclusion. However, in my mind, demonizing the opposition isn’t breaking eggs. It is simplistic, demeaning and it generates only heat without illumination. Demonizing others does nothing to solve problems, but it does bring thinking and dialogue to a screeching halt. Yes, nearly everyone does it. Politicians of both parties demonize their opponents. Cable news stations build loyal audiences doing it. Talk radio hosts make a fortune calling people names. The underlying message of all this seems to be “if you agree with me you’re wise and one of us; if you disagree you’re foolish, evil and one of them.”

          So I think many people, given the context of what has become the norm in America’s political debates, would start off a comment condemning this kind of discourse and end the comment by calling for more of it in support of their own cause.

          What’s terrific, however, is that the rest of your comment underscores my point that demonizing opponents is not only simplistic and demeaning, but is unnecessary as well. You expressed your anger at the Administration and its handling of health care reform as you see it. You did so forcefully and articulately. You appropriately noted the connection between the politics of health care reform and the substance of the issue. You expressed your feelings that the Administration is arrogantly talking down to the public. Yet you didn’t label anyone a socialist or a dictator in the process. You criticized without demeaning. People may or may not agree with you, but they understand where you’re coming from, what you believe and all without labeling the opposition as a “them” that is not deserving of defense.

          When Nancy Pelosi demonized the insurance industry as immoral in 2010 I called her on it. When John Edwards did the same in 2008 I called him on it. When commentators on this blog demonize the opposition I’ll do my best to call them on it, too. There are lots of forums concerning politics and even health care reform where demonizing the opposition is not only tolerated, but encouraged. This blog is not one of them.

    • Curt:

      This response to your comments is overdue, and I apologize. You covered a lot of territory, and I wanted to let it “sink in” to do it justice in my response. So much has been going on this week that I probably won’t give your comments their “Just Due”, but at least it will be a start.

      Thank you for so clearly understanding my frustration, and articulating that frustration so well. Alan and I have known each other for many years (well over 20), have served together on the NAHU Board, and I have even served “under” Alan when he was Chair of the NAHU Legislative Council and I was a member of that Council. I have a very deep respect for Alan. Friends can disagree, and sometimes vehemently. It isn’t a good thing when those disagreements are aired in such a “public” setting; of course compared to some of the disagreements we’ve witnessed on the NAHU Board, this was relatively civil (seriously…I remember a past President of NAHU once throwing his wallet at another Board Member in real anger (I yelled out to the victim to “Keep it!”). It is hard to put “Leaders” in a room together and not at times have “friction”.

      Alan is correct in many of his points. And while you read well my frustrations with the outcome of Obama’s push on HCR, Alan is also correct that it is now law, and we must deal with that fact. In honesty, I don’t believe that we should repeal the law. I think that would leave the public, unhappy though they may be with the passage of HCR, even more frustrated at feeling as though they were “adrift” at sea in a boat without an engine or oars.

      That said, I do believe that, given a shift in at least one House in Congress, we should amend the law until it resembles something far more acceptable to the public in general, and that protects the role of the Agent/Broker Community, which IMHO, will offer the greatest benefit to the Insurance Consuming Public.

      I do believe that Barack Obama and the Democrat Controlled Congress went way off the map in their resolve to pass this bill before tackling Jobs and the Economy, but in candor, I probably have beat that horse enough. Should we end up after the elections with a far more balanced Congress, changes can be made.

      You are correct in your “Scrambled Eggs” analogy. There are different styles of leadership, Alan presents one, and I another which can at times appear to be aggressive, though I won’t apologize for that…it’s my style. I would make a rotten politician…once my “blinders” are on, I have little patience; I just want to get the job done and having been involved in politics for so many years, I know that even with the many amendments that will be necessary to “correct” (my opinion) this law, much time will be spent on procedural processes that will not happen quickly enough to help some of our colleagues. Further, when I read ever more released material about the lack of “Due Diligence” given this historic HCR law being made, it only frustrates me further.

      Curt, when you comment about the “political machine” doing as they please with “impunity” (My word) you are correct, and that is one of my frustrations. The cure for that frustration lies in Political Reform, Campaign Reform, and like Reform (only 10% of our Congress can be made up of Lawyers?). Instead of venting about that, which I do, we need to take action and “Just Do It” (with all thanks to Nike).

      I can talk incessantly, I have always suffered from being “Brevity Challenged”. So Curt, I’ll simply end with, Thank you!

      I’m very serious, BTW, to any who may wish to exchange ideas not appropriate to Alan’s blog…my email address is

  7. BTW, Vince, and Alan, since when should Agents/and brokers, need grovel at the feet of our regulators to be allowed to do our job and be compensated for dong that which they do not want to do?

    This isn’t political correctness, being “Nice” to those who don’t want to recognize our value, it is groveling.

    Since when do you approve such incredible behavior, Alan? Were you mid-career, would you take such a laid-back position?

    I knew you when, Alan. I don’t think so. You showed far more courage, then.

    • Alan said

      Are we reading the same blog Spencer? Where did I say anyone needs to grovel? And I’m not talking about being nice. I’m just saying there are other blogs where calling people “dictator” or “communist” or whatever is acceptable. And this one isn’t. It is possible to disagree forcefully without calling the other side names, attributing to them sins, and insulting readers. It can be done. People do it all the time on this blog. I wish you’d join in.

    • vince phillips said

      Spencer, I would disagree with your characterization when I talked about how uninformed agents will lose out. Re being nice to regulators to me is more than a matter of civility. It is also borne out of necessity if the regulators don’t know the value that agents bring to the table. Speaking civilly at least gives one a platform to build a relationship and that hopefully will lead to a greater understanding of agents’ role. Does that mean I have to clench my teeth sometimes? You bet. But, do I keep at trying to increase their knowledge? Of course I do. Dissing the regulators only if you have a political howitzer big enough or are willing to take the damaging consequences.

      • Vince: I have been engaged in this stuff for over 40 years. I agree with you, that “working with” your regulators will yield more in positive results than condemning them.

        That said, and in recognition of your statement, “It is also borne out of necessity if the regulators don’t know the value that agents bring to the table.” our regulators have been educated and schooled, assured and reassured, by many of us who have served on a myriad of Boards and Committees established by our Regulators. Should they not, buy now, four decades later, not recognize the worth we bring to not only the consumer but to the Regulatory Agencies, then they have been “sleeping on the job”, and there is no excuse for that.

        Anymore than there is an excuse for any who serve in these disciplines to NOT belong to NAHU. Neither has an excuse; but sadly, those in the public sector, don’t need an excuse. They simply do whatever strikes them as “convenient”, and the Hell with recognizing the worth of the Agent Community.

        In 1995 I succeeded, with the help of the Robert Wood Johnson Foundation (RWJF) to have implemented by law, WA State’s Public/Private Partnership for Long Term Care Insurance, and yes, I, without shame, admit that it was my legislation, signed onto and promulgated by Representative Phil Dyer, Chairman of the House Health Care Committee, whose campaigns I chaired for three terms. I worked hand in glove with Marc Meiners, Director, and Hunter McKay, Deputy Director, of the RWJF Public/Private Partnership for LTCi run via the University of Maryland. I had developed a rather Good guy/Insurance Industry Shill persona with Senior Advocacy Groups throughout the country. Hunter McKay was amazed that the then head of DSHS for this area of expertise in WA State, Ken Cameron (who kept a photo of Lenin on his wall, fact, not badmouthing) actually called Hunter and asked him to provide information that would “Kill” the Partnerships in WA State and elsewhere, beyond those four states that had already adopted those partnerships (Illinois, Connecticut, NY, and California). How do I know this? Hunter called me, astounded, that Ken Cameron had such gall.

        When the Partnership was passed into law, it happened one month after Henry Waxman (D) had a secret meeting with Senator Patrick Daniel Moynihan, both of whom came from “Grandfathered” states and ran no political risk, that the two Democrats agreed on a secret amendment to prevent all other states from adopting the same legislation, had they not applied for Medicaid Waivers by May 15th of 1993, one month after we submitted our plan. They knew exactly what they were doing, and royally screwed the country (fact, not supposition, not name calling) for the 22 States that had similar “Enabling Legislation”.

        So when you read that I am cynical regarding Obama, Pelosi, Frank, Dodd, Rangel, yada, yada, yada, you bet I am. I have already, and on more than one occasion, been subjected to the dirty, behind the scenes political gamesmanship with which Alan has taken me to task.

        These people refuse to play fair.

        Do I recognize the importance of attempting to work with our politicos, of course. Have I? Of course. Do I respect them, of course not. When the WA State Office of the Insurance Commissioner established (as required by law) the P/P Partnership for LTCi committee to promulgate the rules for Washington, the first words uttered by Melodie Bankers, the Chief Deputy of the OIC at our first meeting were, “This is YOUR deal, Spence, you can lead us off.” It was not stated with respect, but with disgust, and was echoed by Ken Cameron, then Director of DSHS for the State, who worked hard to kill our bill.

        So Vince, you can disagree with my characterizations all you like. It doesn’t change the Reality.

        The OICs of all states consider us to be the enemy, do not, at the risk of your own career, ever doubt that.

        BTW, as the national office of Medicaid (Welfare) stuck to the rules promulgated by Henry Waxman, no state, not one, has been given a Medicaid Waiver to help Medicaid save taxpayer’s money. That, Vince, is also fact. Feel free to “Google” it.

        Sen. Patrick Daniel Moynihan is now dead, and Rep. Henry Waxman is alive and kicking, and still working against the best interests of the country. Google it.

        I have always, ALWAYS, tried to work within the system. The Public, Government System, rarely allows it. It is their goal, whether or not it sounds like “Badmouthing”, to kill Private Sector incentives. That, Vince, is FACT. It is not disputable.

        Does that mean that we shouldn’t attempt to work with these people? Of course not. But let us not tread in this area as naive, foolish, believing that everyone means well, blind advocates. Let us please, recognize that they have their OWN agenda, and it does not “jive” with the agenda of those of us who are compensated for doing a good job for their clients; they get paid whatever the UNIONS have decreed they will be paid, period. Read the latest on the “Public-Employees Union Now Leads All Groups in Independent Election Outlays”, link:

        It isn’t the American Chamber of Commerce, it’s the UNIONS!

        Now, Vince, who do you think really runs this country? [Hint: It isn’t the Private Sector. It’s the “Guv’mint”.]

        Shall we still try to ameliorate the anti-Private Sector solutions sought by US? Common-sense would dictate, NOT.

        • BTW, to anyone, being the “Just because I’m convinced someone’s after me doesn’t mean I’m Paranoid” type, I’ve kept hard copy records of all of the just stated.

          If you require a “view” of these startling documents, email me. It may take awhile, but I WILL get you the documents you wish to see.

          Spencer A. Lehmann, RHU

        • My apologies. Factual statistics:

          1. Waxman and Moynihan did this via the “Waxman Amendment to OBRA ’93”. That is the Omnibus Reconciliation Act of 1993.

          2. Both Rep. Waxman and Sen. Moynihan came form already “Grandfathered” States, CA and NY. The stood no political risk whatever.

          3. They “cut their deal” behind closed doors. No outside observance whatever.

          4. In spite of several attempts by the RWJF to have Waxman amend his amendment, from 1993 to 1995, he refused.

          5. Why he and Moynihan did this, to the determent of 22 other states has never been made clear.

          6. The “Waxman Amendment to OBRA ’93” stands today.

          7. Nothing stated here, or in the preceding posts regarding the Waxman Amendment, cannot be found by “Googling” these issues.

          We began the efforts to implement a PPP for LTCi in WA, in 1993. It passed the legislature and took effect in 1995. The Waxman Amendment took effect in May of 1993, one month after we “dropped the bill” in the WA State Legislature in 1993.

          ***Note: Ken Cameron called the RWJF in 1994 and asked why they wouldn’t support WA State’s initiative for RWJF funding for a COPES (home heath care benefits). Hunter McKay related this to me, and said, “Why the hell does he think we wouldn’t approve their request? On one phone call they ask for any information that will help them Kill the Partnership, and then wonder why we won’t fund a different project they would LIKE to have?!”

          Gee, I can’t imagine why. Can you?

          Should we always treat our government agencies with respect? Not I, (said he).

          Vince, I have spent my professional life working with and developing relationships with those who would regulate us. I have years of serving on OIC committees, and the Letters of Acknowledgment for having done so. I helped implement the 8 CE hours required of all LTCi agents in WA State (now reduced to six, as the OIC didn’t want all of the work); I know what it means to work with those who would rather we be put out of business. That said, at some point, reality must strike, and we must be fully aware of what it means to work in an attempt to ameliorate and negotiate, with the “Enemy Camp”.

          Questions, Contact me:

          Spencer A. Lehmann, RHU

      • Spencer, I would disagree with your characterization when I talked about how uninformed agents will lose out. Re being nice to regulators to me is more than a matter of civility. It is also borne out of necessity if the regulators don’t know the value that agents bring to the table. Speaking civilly at least gives one a platform to build a relationship and that hopefully will lead to a greater understanding of agents’ role.

        Vince, you made a simple and direct comment that really deserves a straight response: You are correct. Uninformed Agents will lose out. Period. You are also correct that it is far more politically astute to treat the regulators with respect and civility.

        I spent a good part of my career developing just those kinds of relationships. That said, I do find it disturbing when those very regulators, and their Chief Deputies and Deputies, and other staff, most regulators elected and staff appointed by the newly elected regulator, don’t seem to care enough to “pass on” what they have learned about the role of the agent to their successor. No doubt, that’s a downside to having our regulators elected, versus appointed, though that, too, presents its own sets of problems.

        Most of all, I am disturbed when those who are in Leadership at the NAIC demonstrate short memories about the role of the agents and see us more as a tool to be used when it’s convenient, and denigrated when it isn’t.

        I was among those early on who tried to engender a feeling of “It’s the regulator and agent’s problem when the public doesn’t understand the role we play, so let’s play it together. It was that philosophy that led the Washington Association of Health Underwriters (WAHU) and the then Washington Association of Life Underwriters (WALU) to be asked to be the primary “trainers” of the Washington OIC’s (Office of the Insurance Commissioner) SHIBA (Senior Health Insurance Benefits Advisers) program (later, in most states, to be called SHIP (State Health Insurance Program). SHIBA began in Washington, the first state to launch such a program, in 1981.

        Why this model hasn’t received greater national recognition, which would have had the added benefit of demonstrating a State’s Insurance Department’s recognition of the positive role of the Agent Community, I can’t address, I don’t know. Fear of compromising their own credibility perhaps, acknowledging that the Agent Community can help further the goals of the OICs. In any event, for too often, and in too many instances I hear denigrating and “incorrect” information being disseminated to the public by Insurance Commissioners who often make their reputations as those who will keep the Agent Community “in line” and honest. These regulators do a disservice to the Agent Community and to the Insurance Consuming Public. ObamaCare didn’t help our cause, as ObamaCare was in part promoted as a means of protecting the consumer from the companies, and thus us, as few who aren’t in our business understand or make the distinction, especially between independent agents, and captive agents. Those of us who are “independents” far outnumber the “captives”.

  8. vince phillips said

    Something I’ve been thinking about is the need for agents to become more informed re the PPACA. Many aren’t and they will be at a competitive disadvantage. Those who are informed demonstrate their worth to businesses that truly need a helping hand in compliance. Some are even using compliance as a fee (non-commission) point of business. An observation too is the value that you present in this blog…very well done. I do think agents need to also join the National Association of Health Underwriters as a vital link to information and resources.

    • That’s nice, Vince. Only Agents can’t charge a fee. Only Brokers can. And Agents serve as much a value as Brokers, maybe more.

      Anyone who takes from this business should absolutely belong to THE NAHU. Was that ever at question? How else do you, “Pay your dues?”

      I wasn’t going to post here again, but how can I ignore such nonsense?

      • Alan said

        LOL. Spencer: I think it’s safe to assume Vince was referring to “agents” in the generic “agent/broker/consultant” sense. And given the fact that with 24,000 members the majority of brokers making a living from health insurance sales are NOT members of the organization, I think Vince’s comments are reasonable and appropriate — and certainly aren’t nonesense.

        • “…given the fact that with 24,000 members the majority of brokers making a living from health insurance sales are NOT members of the organization,…”

          Then shame on them for taking advantage of what NAHU does for them, while they hang on as do the sucker fish that clean the hide of a Shark.

          We must all do our part, if we expect the National Association to do it’s part in helping to protect pour best interests.

          Any, who think that this comes as a “freebie”, given the hard work done by those as you and me, needs to rethink their priorities.

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