With the constant erosion of the commission structures to agents for enrolling consumers into health plans in California, many agents have expressed their desire to stop assisting individuals and families with enrollment into Covered California health insurance. There has been renewed talk of allowing agents to charge a consultation fee to make up for the dwindling commissions they earn from the health plans and insurance companies. However, if agents want to make a decent return for enrolling consumers into health plans they need to provide the service so many of them advertise. We need to move from order-takers to consumer advocates, and we need fair compensation for our services.
Agent Service Increase, Commissions Decrease
Ever since the Affordable Care Act was implemented, health insurance agent commissions have been tumbling down hill. There are many reasons for the decrease in the commissions the health insurance companies pay to agents. Part of the issue is the Medical Loss Ratio regulations that mandate the health insurance companies must spend 80% of their premium revenue on health care services and quality improvements. Agent commissions falls into the 20% category of administration and marketing costs. One way to cut those marketing costs is to cut commissions. (If you want proof of the eroding commissions over the years, just search for Commissions on my website and you’ll get numerous post documenting the cuts.)
Health Insurance Underwriters
But another important factor is the value the agent brings to the health insurance company. Before the mandate of guarantee issue for individual and family plan health insurance, consumers were screened for existing health conditions. This meant that consumers could be denied coverage – the dreaded pre-existing condition clause – or be issued health insurance but at an elevated premium rate based on their risk for filing health care claims. The agents were known as field underwriters.
Pre-Existing Condition Questions
Agents would meet the perspective clients and do preliminary underwriting to see if the individual or family met the health conditions for coverage. You may remember all those health underwriting questions
- Are you pregnant?
- Are you thinking of becoming pregnant?
- Do you even like children?
- Have you stubbed your toe?
- Have you sought medical treatment for the stubbed toe?
- Has a doctor recommended treatment for the stubbed toe?
If you answered Yes to any of the above questions you are ineligible for health insurance, please visit your nearest health care clinic in another country for treatment.
The health agent brought a certain level of value and efficiency to the underwriting process by filtering out consumers who may not qualify for health insurance. This, in turn, reduced the expense of the lengthy underwriting process and saved the health insurance companies money.
Online Do-It-Yourself Enrollment
With the advent of guarantee issue health insurance and multiple consumer do-it-yourself enrollment channels, what is the value of an agent today? Certainly, a knowledgeable agent can explain the various plan features (deductible, coinsurance, copayments, etc.) along with the plan limitations and exclusions. An agent can also be instrumental for consumers who are applying for health insurance outside of open enrollment during a Special Enrollment Period, which has its own set of rules.
Covered California Enrollment is Not that Easy
What has agents bothered the most is that when it comes to Covered California enrollment, the work load and expertise has increased far beyond the old health underwriting days. But as the expertise to enroll a consumer through Covered California and into a health plan has increased, the commissions have decreased. This had led some agents lobbying to be allowed to charge a consulting fee to take consumers through the Covered California journey.
Agents Should Not Charge A Consulting Fee
I don’t believe agents should be charging consulting or processing fees to consumers for the simple fact that agents are an extension of both the health insurance companies AND Covered California. We are in the very sense of the word, agents. We have signed agreements that we will represent the organizations with integrity and abide by their ethical code of conduct. If neither the carriers or Covered California charge consumers for their services, neither should agents.
Redundant Call Center Costs
While the insurance carriers and Covered California recognize the value of a well-trained agent when it comes to assisting consumers, they are facing increasing costs to manage the enrollments and servicing of the health insurance benefits. These costs are in the form of call centers. If both the carriers and Covered California have to incur the costs of call centers for enrollment and servicing, why do they need agents? Why should the carriers compensate agents just for being order takers like a teenager working the drive-through window at a fast food joint? (Actually, minimum wage fast food positions can pay better than being a health insurance agent! See: How much does a health insurance agent earn?)
Agents Are the Only Impartial Consumer Advocates
The simple fact is that agents are the only member of the health insurance market place that can guide consumers to selecting the best health plan for them and their families. Only agents can impartially represent all the health plans to consumers. Only agents can prioritize the health plans that best meet a consumer’s needs with research into network providers, plan options, and prescription drug analysis. The health plans can’t do that. Covered California can’t do that. Markets achieve their highest efficiency of allocating resources when consumers have good information about the available products. Agents facilitate the transfer of important information to consumers upon which they can make informed decisions. Agents are consumer advocates.
Value Proposition of an Agent
The value proposition of a properly trained health insurance agent is that he or she reduces the costs to the carriers and Covered California. If agents can demonstrate that they are reducing expenses, they should be properly compensated by the health insurance companies. An agent who understands the Covered California enrollment application and is fully versed on all aspects of the health plans can actually reduce the expenses both the carrier and Covered California. Not only can the agent enroll consumers into the correct plan for the consumer’s needs, he or she can play an important role by handling the consumer’s future questions and problems should they arise.
Fair Compensation for Guidance, Enrollment, & Servicing
But for agents to stake a claim that they are reducing expenses and should receive proper compensation for their contribution to the lowered costs, as well as, their time, talent and expertise, they need to demonstrate the value proposition they bring to the table. In other words, they need to step up to the plate and provide the service they tout in their marketing. Agents also need to be given the tools to help consumers by the carriers and Covered California.
Some of the actions agents can take to demonstrate their value to the health insurance market.
- Agents should research whether a consumer’s preferred providers are in-network for which plans. If a consumer asks how they can determine if their doctors and hospitals are in-network, an agent should take the list and do an online provider search for the consumer. This can take time, especially because each of the health plans has a different search tool for locating providers and they don’t work all that well. (The Covered California plan to have a statewide online search database of providers flopped in 2014.) By enrolling a consumer in a health plan that has most, if not all of his or her providers, there will be fewer issues to deal with later such as out-of-network charges and consumers wanting to switch plans.
- Agents need to understand the health plans they are representing. They should be familiar with the standard benefit designs for Covered California plans as well as the non-standard benefit design plans offered off-exchange. Covered California can help with this process by mandating that all health plans publish the Evidence of Coverage (EOC) before open enrollment begins. The EOC is the rule book for how the plan operates. It lists the limitations, exclusions, additional benefits, special rules for prescription drugs, and pediatric dental and vision benefits. But an agent can’t answer consumer questions if the contract for the plan isn’t even published until after open enrollment has ended.
- Agents need to offer post enrollment assistance. Too many health plan members call the health plan or Covered California when there is a problem instead of their agent. A knowledgeable agent can probably field 50% of the questions a consumer has without making another phone call to Covered California or the carrier. Agents need to advertise that their assistance doesn’t stop with the enrollment.
Health insurance carriers and Covered California actions to increase the accountability and value of agents
- Covered California needs to provide better training of their enrollment system. The last training agents who originally became certified to enroll consumer in Covered California was in 2013. The entire CalHEERS system has virtually been remade since then. With every CalHEERS update, something new has been added or the functionality has changed. Covered California does a mediocre job of keeping agents up to date. They need to make it mandatory that agents review all updates to the system or have their certification suspended.
- Covered California needs better training on Modified Adjusted Gross Income (MAGI). In recent years Covered California has provided more job aids pertaining to the MAGI, but has really avoided talking about the Premium Tax Credit reconciliation. I don’t know about other agents, but I work with a lot of self-employed families. If they don’t estimate their MAGI correctly, they could go over 400% of the federal poverty level and trigger a repayment of all Advance Premium Tax Credits. Conversely, underestimating MAGI can put some or all of the family members into Medi-Cal when they aren’t really eligible. While I tell my clients I am not giving tax advice, we still discuss their 1040 Schedule C, D, and E to help them plan for the future.
- Tell consumers to call their agents. When a consumer calls Covered California for assistance, part of the script should be, “Have you contacted the agent who enrolled you?” The agent’s name and contact information should be printed on all correspondence from Covered California. Covered California needs to drive some of simple questions they get hit with back on to the agent. In time, with the proper notifications, consumers will learn to first reach out to their agent. This will reduce the call load on Covered California.
- Print the agents name and contact information on the member ID card. The health insurance companies should also start directing call traffic to the agents. While I understand agents can’t answer all questions, we can be the first line for generic questions that clog up the carrier’s phone lines.
- Hold agents accountable for questionable open and special enrollments. While agents have been put on notice that they face consequences if they assist in a fraudulent enrollment, there has been no indication that it is happening. Covered California is only randomly auditing the verification of the qualifying events for a special enrollment period. Fraudulent special enrollments are costing the health plans millions of dollars. Agents need to be the first line of defense against fraudulent enrollments.
Agents need to be more integrated into the systems of both the health plans and Covered California. The current relationship is that the health plans and Covered California only look upon agents as sales tools. If they want to control and reduce their expenses, they need to make agents a real partner in the enrollment and service process for consumers. If more is expected of agents, then those agents who only want to serve as a sales tool will drop out of writing individual and family business.
All of these suggestions to improve agent integration with enrollment and servicing are predicated upon the assumption that the commission structures will stabilize and the compensation to agents will increase. There are many agents already providing many of these services and more. I know lots of agents who work with clients to straighten Medi-Cal nightmares for which there is no compensation.
Hold Agents Accountable
As an agent, I am willing to be held more accountable for my enrollments and plan member services. I’m willing to take additional training and testing on the CalHEERS program. But I also want both the carriers and Covered California to recognize that my actions save all of the organizations money. My consumer assistance reduces contacts to their call centers. When I do call on behalf of the consumer, because I usually have all the information, problems are resolved more efficiently saving the health plan or Covered California money by reducing staff time to address the issue.
Agents Can Reduce Health Insurance Expenses
Agents are only being utilized as one part of a successful health insurance market place: enrollment. Agents can and should play a larger role. If Covered California and the health plans work together to more fully integrate agents into better screening of SEP enrollments and post-enrollment servicing of member questions and problems, the health insurance market place will become more stable. Expenses will be reduced. Rates will not skyrocket to cover fraudulent claims. Consumers will be happier that the plan they selected is working for them. But none of this will happen if the health plans don’t embrace the value proposition of agents and fairly compensate them for the role they play as consumer advocates in the health insurance market place.