Latest blow for Obamacare: Health insurance brokers add fees

Rob Arvin has spent the past few weeks making frustrated calls to health insurance companies.  As an insurance broker, it’s his job to analyze the minutiae of health plans available for Texans, and work with customers to select the best one for their needs.

But with open enrollment just a few weeks away, he’s still not 100 percent sure what he’s going to advise his clients to do come November.

“It’s become a bit of a guessing game,” he said, explaining that plans now change substantially from one year to the next, and it’s harder to get important details from insurers well before open enrollment season.

Health insurance brokers are one of many industries that help both individuals and small businesses navigate the complex health insurance maze. Their services have been highlighted as key to helping  uninsured Americans get enrolled following the Affordable Care Act rollout.

The number of people employed to help insurance shoppers to shop has been steadily increasing, with just over one million agents, brokers and related service employees logged in 2014, according to The Statistics Portal. Nearly 260,000 worked in Texas.

Brokers typically get paid by commission from health insurers when they  enroll someone into a plan. However, they say it’s been harder to do business, and not just because of the delay in getting access to plan information.

"We're still doing all this work, but our income has decreased," said Arvin, who runs Arvin & Associates based in Dallas.

Insures have cited millions in financial losses on Obamacare plans sold over the past few years. Slashing the commission payments made to brokers for enrolling consumers into plans on the exchange is one way they are saving money. It’s also discouraging enrollment into policies that cost insurers the most money.

This year, for the first time, Arvin began to charge his customers a $200 fee.

A CHANGING LANDSCAPE

Arvin’s not the only broker adjusting his business model. But it comes at a time when consumers arguably need the most help navigating changing health policies for which they ultimately bear greater financial responsibility.

Consumers in Texas will feel the impact.  Though the U.S. Department of Health and Human Services says most people will be able to purchase a plans for less than $75 per month during open enrollment, critics said the plans would likely require higher deductibles and co-pays, and therefore not be affordable.

Dozens of counties in Texas may have just one health insurance option to chose from as insurers have updated their state offerings. Over the past few months, Aetna, Scott and White Health and Oscar all announced plans to either drop or limit their Obamacare plans, which means individuals on those plans will have to shop for new ones.

Blue Cross Blue Shield said it will continue to offer coverage in each of the state’s 254  counties. With with about 603,000 individual policyholders, a pull-out in Texas would have dished a real blow.

But what’s also worrisome for health policy experts, is that people who do have options and use brokers to buy health plans for 2017 may not get information about on-exchange plans, even plans that are appropriate for their needs.

“If there is no commission, it’s less likely they are going to promote those plans,” said Marianne Fazen, executive director of the Dallas-Fort Worth Business Group on Health. “Brokers are in business to make money, and they don’t want to lose business.”

BUYER BEWARE?

It’s reminiscent of the situation that led to the mortgage collapse in the mid-2000s, added Dr. Steffie Woolhandler, cofounder of Physicians for a National Health Program, which supports a single-payer health care system.

“Brokers are being rewarded for putting people into plans that are not the best for them,” she said. “The payment structure is not in the best interest of the customer. Buyer beware has no place in the care of sick people.”

At least one area broker said he’s facing that choice. “They (insurers) basically told brokers, ‘We don’t want the business,’” said Greg Koch, who is licensed to sell health plans from various insurers in Texas. He’s  going to avoid plans where the commission rate is too low.

"Insurers are stuck between a rock and a hard place... and they’re making it difficult to not only enroll in coverage, but also to sell," he said. Koch's not adding a fee to his service, though; he can still make a profit selling dental, life and other supplemental insurance offerings.

But to Woolhandler, it’s another example of how consumers lose when healthcare is a business sold on a marketplace. Brokers prosper by getting patients on to plans that make them and the insurers money, she said.

Still, helping individuals understand and purchase health insurance policies is a “critically important,” service for those who are not insured through their employer, said Jennifer Sullivan, director of best practices for Enroll America, a nonprofit that supports the federal health law.

People who get in-person help are more likely to enroll successfully and report being more satisfied with their plan, concluded an Enroll America report published in September, which advocated that more be done to make enrollment assistance available to every American.

NAVIGATING THE MAZE

Navigator positions were created through the ACA, and include individuals and organizations certified to help consumers shop for plans on the Marketplace.  In Texas, there are 13 organizations  and and 112  individuals who are approved to work in this capacity.

They cannot receive money from insurance companies and there's no charge to consumers, as the salaries are paid through federal money.  In 2016, 34 states with a federally-facilitated marketplace, including Texas, received navigator grant awards to help enroll people in rural areas, minorities, those with language barriers and other populations. About $9.2 million was awarded to organizations in Texas.

However, only eight percent of people sought the help of navigators last year, according to a Kaiser Family Foundation survey conducted between Feb. and Mar. 2016. The most frequently used source of assistance were health insurance brokers and agents, the report found. About 34 percent of people who switched plans last year used one, the poll found.

Unlike agents, who are paid to sell plans for a solo insurer, brokers work with multiple carriers, and are generally are paid commission when they enroll a client  in a plan or help them renew. Their consultations generally come at no expense for the consumer, as the service has been been built into the rates set by insurance companies.

But those days may soon come to an end.

This month Aetna said it would not offer commission for 2017 individual plans in 14 states, including Texas, Louisiana and Arkansas. Likewise, in September, Scott & White Health Plan said no commission will be given for marketplace plans sold during special enrollment periods, and that commission for marketplace plans sold during open enrollment will drop to one percent for a PPO and two percent for an HMO.

Cigna said there would no commissions for ACA-compliant individual and family plans sold in Texas whether for new sales, plan renewals or those purchased during special enrollment, like if someone gets married or loses a job after the regular open enrollment period has ended.

When Oscar decided in August to withdraw most of its plans from the Dallas-Fort Worth market, the company said it would continue to pay broker commissions only through the end of 2016. Insurers defend the commission cuts, noting their losses.

Blue Cross Blue Shield of Texas, which offered no commission for plans that began in 2016, has reintroduced the payment. It created a three-tiered commission model for new sales of ACA policies, with commissions ranging from five percent to 1.5 percent depending on the product.

EVOLVING MARKTETPLACE REALITY 

Scott and White Health plan told the Dallas Morning News that they, like other insurers, face “significant challenges” in providing commission on ACA products that are not profitable, while maintaining affordable rates for members.

Cigna said it’s commission change “reflects the evolving reality of the individual marketplace,” and said that the decision was made to ensure the company would be able to offer customers access to the best combination of options.

Brokers say fallout from the law is leaving them in a tough position. More frequently they are asking customers for “a flat fee paid in advance,” said Carolyn Goodwin.

She’s a broker in DFW and a former director of legislative affairs for the Texas Association of Health Underwriters, a professional group that represents licensed health insurance agents, brokers, consultants and benefit professionals.

Before the health law, broker commissions could reach into the 20 percent range, but they have steadily decreased. One percent on a policy might equate to $30 a year for a broker who spent a full day helping a client. Their services  include evaluating copays, drug formularies and provider lists on new plans, then creating detailed comparisons for each client and following up during the year if a client has a claim issue.

However, with more cost-shifting leading to higher out-of-pocket expenses for  patients, most experts agree that understanding the nitty gritty details of a health plan is critical.  They also agree that despite best efforts, it can be challenging to understand the marketplace and make those critical decisions without help.

“It’s a maze that’s very difficult, even for a healthy, well-educated person to figure out,” Woolhandler said. “You shouldn’t have to be a consumer. The nation needs a simple plan, one that you are enrolled into the day you are born.”

THE UPSHOT

In the meantime, more people are getting covered as a result of the healthcare law.

Nationwide, an estimated 4 million people gained health insurance coverage between 2014 and 2015, dropping the number of uninsured down to 29.7 million people, or about 9.1 percent of the population, according to recent estimates from the U.S. Census Bureau.

About one-fifth of the 2.5 million people living in Dallas County were uninsured in 2015, an improvement from 2012 when nearly a third of the county was uninsured.

As people sign up on the marketplace, consumers are encouraged to consider their options for assistance carefully and be aware that the business is changing.

Some brokers are not taking new clients, as they adopt to the changing marketplace and try to manage current clients, whose plans are constantly in flux, Goodwin said.

Others like Arvin, who have begun to charge, say they should not be overlooked, especially by those who do not qualify for a subsidy to help lower premium costs.

“A lot of research goes into really helping customers understand the plans, and we’re doing everything we can,” he said. “Good agents do a lot more work than most people realize. But those of us that stick around are probably going to be fee only.”