As we move to the end of the open
enrollment cycle for the individual market, and we look ahead to our industry
in the New Year, we clearly have some challenges, but also plenty of
opportunities. Our membership is diverse -- we have agent members who are
primarily engaged in the individual marketplace, MediCare, small group, large
group, along with carrier and GA reps. CAHU also has lots of people who
are new to the industry -- a number coming into the business to capture
opportunity from the Affordable Care Act. And thankfully, others who are our
long term members who have been the backbone of the association for years.
All of our individual members
have one thing in common -- we continue to work toward a goal of financing the
health care of all Californians -- through insurance, self-funded plans, gap
plans, or whatever the market offers us and works best for our clients.
Over time, as we all know, those market
offerings have changed. The most recent change is Covered California
(Covered CA) as the newest entity, with significant change and disruption in
the individual marketplace. But there are also other new plans out there,
like the expansion of Sutter Health Care, and the opportunities and
difficulties that those new programs provide. Some will go -- like
SeeChange Health. I guess what I am really trying to say: change is
constant, and it is our job as professionals to take what we have handed out
and to make it work for all concerned.
CAHU is not the market maker --
we do not invest the capital, we do not create the plans, we do not negotiate
on behalf of agents. In fact, there are laws against that. But what
we can do is to help our members make sense of what is going on, keep our
members informed, and to try to keep a level playing field for consumers
and ourselves. And that is what we do in Sacramento, as well as in
Washington D.C.
To that end, we have had a lot of
requests that CAHU deal with the "commission issue". Clearly,
ever since the ACA passed, there has been tremendous pressure on commissions,
especially in the individual market, with some companies dropping commissions
to levels that make the sale of a plan frankly a money losing proposition --
because 90 percent of the service we provide comes after the sale of the policy.
The pressure, I believe, is due mostly to the Medical Loss Ratio (MLR) calculation.
The issue for CAHU is that we are
barred by law as an association from directly negotiating with carriers under
antitrust rules on issues of compensation. Our members are either independent
businesses or work for one. Negotiation as a group of agents with a
carrier is an antitrust violation (price fixing), which we take very seriously
(I do not look good in prison orange). It would be as if all of the
carriers got together in a room and said, let's reduce commissions “x”
percentage -- that would also be an anti-trust violation, and we would expect
the authorities to look into that. Similarly, we do not get involved in
the marketplace setting of commission levels or negotiation of such levels.
There are some things that our
members have asked for in terms of addressing the issue of commissions from a
legislative perspective. The first option that was floated in the
blogosphere was to allow health agents to charge a separate fee in the
individual marketplace for placing and servicing business. In California,
agents are not allowed to do that at this time. In fact, if the agents
were allowed to do that legally, other problems immediately crop up.
For example, the Covered CA
agreement specifically prohibits agents from accepting a separate fee, and many
of the agent agreements with the carriers also prohibit additional fees.
Secondly, the process of taking a fee would be similar to when a P&C
broker takes a fee for service – an agent would have to set up a separate bank
account for client funds, issue billings and accept the premium on behalf of the
client with the fee built in, and then pay the carrier directly from the client
funds account. I do not think any individual agent would want to go
through all of the book keeping headaches to simply charge an additional fee.
And I do not think the carries would want to deal with collecting fees from the
agents. So, in my view, that is not something that CAHU should be
pursuing.
NAHU is clearly aware that the
major reason of commission reduction is the impact of the MLR in the ACA.
We continue to work at the federal level to address that issue, and I am
hopeful that this year NAHU and CAHU working together with the other state
chapters may be able to address the problem of the MLR. Hopefully, with
the change in the congressional makeup and a little goodwill on the part of the
President, it may be possible. Agents definitely have to try because removing
this restriction from the marketplace will allow the marketplace to level out
in this area because the independent agent is still -- by far -- the most cost
effective and efficient way to sell health insurance in the country.
Imagine trying to put together a direct sales force to meet that level of
sales, and the cost for support, advertising, etc. It is just not
feasible.
That being said, the Board is continuing
to review our options at the California level to ensure the fair treatment of
agents, and I will have more to report in the coming days.
Covered CA Update
The individual open enrollment is
scheduled to complete in a bit less than a month. CAHU worked with
Covered CA over the past months to address the issues that our members raised,
including bringing system issues to the fore, asking for further explanation on
certain items, which made it to the Covered CA weekly updates, and other items.
Agents have sold the bulk of the business into the exchange this year,
and I expect that over time, especially as we move into the last month, that
will continue to grow. At this point, Covered CA call center is fully
staffed, and the hold times on the agent line are reasonable.
However, during the last month of enrollment, the 1095a tax forms will be sent out to all who received a subsidy, and you can expect Covered CA to be hit with a high volume of calls. So if you have anything that you are interested in getting resolved, call Covered CA now. If you have questions on the 1095a process, there is a webinar that has been recorded on the Covered CA web site. Please be aware that we expect there will be issues on the 1095a forms. So please check out the webinar on the process for getting these issues resolved.
However, during the last month of enrollment, the 1095a tax forms will be sent out to all who received a subsidy, and you can expect Covered CA to be hit with a high volume of calls. So if you have anything that you are interested in getting resolved, call Covered CA now. If you have questions on the 1095a process, there is a webinar that has been recorded on the Covered CA web site. Please be aware that we expect there will be issues on the 1095a forms. So please check out the webinar on the process for getting these issues resolved.
Patrick Burns, President
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