Exchanges Need Brokers

I’m at the National Congress on Health Insurance Reform meeting in Washington, DC. One of the speakers today was Shawn Nowicki of HealthPass and the Northeast Business Group on Health. They run an exchange for small businesses in the greater New York City area.

Mr. Nowicki offered some real-world, practical advice to policy makers at the state and federal level responsible for establishing exchanges under the Patient Protection and Affordable Care Act and what it takes to make them successful. Given the great concern expressed by some of those offering comments on this blog about whether brokers will have a role in these exchanges, I thought readers might appreciate hearing Mr Nowiki’s thoughts on the subject.

Mr. Nowicki made clear involving brokers is critical to the success of an exchange – not just when it comes to selling health plans within the exchange, but “throughout the process.”  He noted that brokers drive the individual and small group market. Employers and consumers, he noted, have a personal relationship with their broker and trust them (implying brokers are more trusted than the exchange, the government, or carriers – an observation I think most objective observers would agree with).

Mr. Nowicki implicitly acknowledged that if brokers are excluded from exchanges, many small groups won’t even consider them. He went on to urge those who dismiss the importance and value of brokers to “reconsider their rhetoric.”

Ultimately the states will determine what role brokers play in the exchanges – and results will vary. Some states, like California, have already taken steps that appear to be anti-agent. Both Democratic and Republican lawmakers around the country too often have express the belief  that exchanges will be a panacea allowing consumers and small businesses to buy coverage simply and easily without an “intermediary” (or a counselor and advocate, as I would describe our role). Which means no matter how pro-business a state’s reputation, brokers need to bring to the attention of those creating and defining the exchanges the insights of people such as Mr. Nowicki.

As I’ve discussed in the past, buying health insurance is different than buying a book or airline ticket. Put simply, health insurance is complicated, expensive, rarely shopped for, very personal and extremely critical to one’s health and financial security. This is not a purchase to be made lightly. Consequently, consumers and small businesses want an expert to help them make the right choice. This is especially true for business owners who are not just making a choice for their own families, but for the families of their employees as well.

As Mr. Nowicki noted, however, brokers are important not only at the time of sale, but after the purchase as well. Exchanges may standardize some aspects of the market, but their very existence is an added layer of complexity. When a problem arises, who is an employer to call? The carrier? The exchange? What happens when, as it inevitably will, the carrier and the exchange each point the finger of blame for that problem at the other.

Today, brokers help level the playing field between consumers and the more powerful carriers. In the future their expertise and experience will help level the playing field between consumers and the more powerful exchanges.

States will take varying views on the role brokers should play in the exchange. As Mr. Nowicki made clear, the toll – and consequences – could be high for hose who minimize that role.

6 thoughts on “Exchanges Need Brokers

  1. We should keep in mind agents will be more efficient than employees of an Exchange. Employees of an Exchange, most likely, will be slaried with generous benefits. This employee package will be received no matter what they do during working hours. Agents are only paid if a sale is made and the customer satisfied to renew. Agents have an inducement to make the customer satisfied, the Exchange employee will not. Exchange employees will receive increasing salaries and agents must work harder to increase their income. I have been in the multi-line insurance busines a very long time and only remember commission reductions not increases.

    It would be exceptionally bad judgement to ignore the value of commissioned agents. In fact, one would be incompetent to ignore that value.

  2. Alan, as a 30-year veteran of the health insurance business, I echo your comments about the broker’s role. An Exchange without brokers is doomed for failure.

  3. Alan, I like your post. Let’s go with that positive attitude. I’m trying to make sure my client relationships are tight and that I stay in front of them as much as possible. The healthcare reform has given me an opportunity to communicate more with my clients.

  4. Thanks Alan for relaying the promising opinions of Mr Nowicki. My observations of a leading benefits portal that offers a choice of plans to the consumer has convinced me that California has taken the lead. Exchange “Navigators” will become the norm for most small business owners and their employees.

    I expect the exchanges and future regulations will create a transparent and level “playing field”. Plans, premiums, benefits designs will be standardized similar to today’s medicare supplement market. Consumers will be able to not only compare plans and premiums, but can determine which coverage is most suitable based on the results of a personal health assessment survey. Participants can identify likely health care expenses by zip code, and have a cost benefit analysis compare the best coverage choices for an applicant.

    Exchanges will eliminate the time consuming and mistake prone paper enrollment process. Consumers questions about the portal will be handled by live chat or a telephone call to a system “Navigator”.

    Brokers should recognize that change creates opportunity. New fee based models and third party alliances will be the way of the future.

    Thanks for letting me add my 2 cents.

    Bruce Silver

  5. I work in downstate NY and am very familiar with Healthpass. It is important to note that while it may be a way of describing their business model – Healthpass is not offering anything different in terms of price or benefits than the same insurers plan outside of Healthpass. Not all carriers doing business in our area participate in Healthpass. The chief advantage of the Healthpass format is that several plans at different price points can be offered to the empolyer on one bill. There is no real cost saving beyond this.

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