Forbes Piece on the Future of Agents by Merrill Matthews

Let’s hope this one is premature…

Commentary
Health Insurance Agents, RIP
Merrill Matthews, 08.30.10, 12:00 PM ET

The first casualties of ObamaCare–not counting truth and the trust the public had placed in President Obama to keep his promises–will be health insurance agents. That proud army of tens of thousands of Americans whose calling was to help individuals and employers work through the maze of available health insurance policies to find one that met their clients’ needs.

Democrats pushing ObamaCare, just as Democrats pushing ClintonCare 17 years ago, always saw the demise of health insurance agents as an acceptable, even a desirable, loss.

In November 1993, when then-First Lady Hillary Clinton headed up her own scheme for a government takeover of health care, an agent asked her what would happen to health insurance agents under her plan. The Wall Street Journal quoted Clinton as saying, “I’m assuming anyone as obviously brilliant as you could find something else to market.”

And now that the Clinton vision has finally come to pass in ObamaCare, many of those agents will indeed find something else to market–because they’ll have to.

It’s not like you couldn’t see this train wreck coming. Once the health care reform debate got underway, I began to warn health insurance agents in speeches and on conference calls that when Obama referred to administrative waste, he was talking about them.

Some of them told me they, in conjunction with their primary trade association, the National Association of Health Underwriters, were visiting members of Congress trying to convince the powers that be that agents provided value. That still appears to be NAHU’s basic strategy.

I think those efforts have been pointless. That’s because of what former President George H.W. Bush called “the vision thing.” The vision guiding those who are really driving the reform effort is a country in which people go online and choose from three or four comprehensive health insurance plans. There will be some choices, like the size of deductible. There may even be a few benefit choices. But ObamaCare is about dramatically reducing choices, not expanding them.

Fifty years ago when people’s telephone options were limited to a black landline, they didn’t need an AT&T store filled with trained professionals to help sort through their needs, finances and available plans.

Health insurance options, like phone options, have exploded in the last decade, with all kinds of innovative new plans entering the market–until now. ObamaCare, as Deputy Sheriff Barney Fife might say, is going to nip that in the bud.

With a handful of health insurance options available online, consumers won’t need an agent. Besides, the law’s provision mandating what health insurers must spend on claims, known as a minimum loss ratio–80% of the premiums for small employers and 85% for large employers–will leave little money to pay agent commissions.

Indeed, agents have told me that health insurers in the individual market–where people buy their own policies–have notified agents selling their products that commissions are being cut. Worse yet, some insurers have even warned they may be forced to cut commissions retroactively, depending on the decisions to be made about those minimum loss ratios. Thus, an agent could sell a policy and get a commission for it only to be told later that he has to give some of that money back.

In addition ObamaCare envisions getting most individuals and small employers in the newly created “exchanges,” similar to what Massachusetts implemented in 2006. Those exchanges will make agents’ problems even worse. A colleague of mine recently received an e-mail from an agent who wrote, “Once my employer clients hear how [ObamaCare] all fits together, 100% of them have said that they will cancel their group plans, and have their employees utilize subsidized care via the government exchange.”

Of course, health insurance agents may continue selling other health insurance products, such as long-term care insurance to cover nursing homes and assisted living facilities. Though even there ObamaCare includes the Community Living Assistance Services and Support Act, or CLASS Act (bureaucrats can devote a lot of effort thinking up catchy bill titles; often more consideration, frankly, than they give on the impact of their bills). It’s a poorly designed and woefully underfunded effort to create a new entitlement for long-term care needs.

Agents can also turn to Medicare supplemental coverage, though probably not Medicare Advantage plans, since ObamaCare tries to defund that program. And there are other types of policies that pay cash if a specific disease appears, such as cancer.

And there’s always life insurance, at least until Obama decides that he needs to reform that market also.

Health insurance and health insurance agents are in for a big change. But no need to worry, even in this awful economy. They’ll be able to “find something else to market.” Just ask Hillary Clinton.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas.

Kevin S. Wrege, Esq.

President

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4410 Massachusetts Ave., NW, #150

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Bloomberg News — Small Biz HC Tax Credit Limited

Focus On Entrepreneurs, August 2010 August 26, 2010, 3:33PM EST text size: TT

Small Businesses Skip the Health-Care Tax Credit

Insurance brokers say response is low because the value of the benefit declines quickly for companies that pay average annual wages of more than $25,000 or employ more than 25 workers

By David Lerman and Liz Smith

Sales are off by 20 percent this year at Image Computer, which repairs printers in suburban Detroit. So President Steve Olis is worried about whether he can continue paying the $71,000 a year it costs him to provide health insurance for his employees.

The Obama Administration’s answer for Olis and other small-business owners: a tax credit of as much as 35 percent of the insurance premiums they pay for employee medical coverage, a signature part of the health-care reform bill signed into law in March. Image Computer, however, doesn’t qualify for the credit because Olis pays his 15 employees an average of $55,600 annually, and companies with average salaries above $50,000 aren’t eligible. “At some point I can’t do this any longer,” Olis says of his rising health-care premiums.

Eager to promote the new small-business tax credit, the government this spring mailed 4 million eligible companies postcards with highlights of the program. The response has been tepid, according to insurance brokers who sell small-group policies. The reason, they argue, is that the credit starts to phase out for companies that pay average annual wages of more than $25,000 or employ more than 25 workers. The value of the benefit declines quickly, so many business owners in high-cost states get no tax break, and those elsewhere often say the credit is too small to make much of a difference. Sales of health plans have gotten “very little traction so far,” says James Stenger, director of business development for BenefitMall, which sells small-group plans in New Jersey.

Stenger says most of his clients pay their workers more than $25,000 a year, so the average tax credit he’s seeing for the few who qualify is about 10 percent of the cost of the policy. That’s less than $200 per worker—not enough to spur many business owners to start providing coverage. Brokers across the country report a similar response. JLBG Health in Warrenville, Ill., contacted 460 small businesses about the tax credit. Roughly 40 percent were eligible, though only seven of those companies qualified for the full benefit. Not one of the 400 New England employers served by Hampstead (N.H.)-based Landmark Benefits is eligible, the broker says. The legislation “is just not doing what we had hoped,” says Steven Selinsky, the incoming president of the National Association of Health Underwriters.

U.S. Small Business Administration chief Karen Mills says complaints about the tax credit are premature. “This is all still in anecdote land,” Mills said in an interview. She maintains that the income cap was needed to keep a lid on the cost of the tax credit and that the people with the greatest need—low-paid workers at the smallest companies—will be able to get coverage. Companies “want to provide health insurance [because] they’re losing good employees when they don’t,” Mills says. “The math says [the program] is likely to be positive.”

One company that has had success selling policies under the program is Blue Cross and Blue Shield of Kansas City, which launched a marketing push to promote the tax credit when the law was enacted. Although less than a quarter of small businesses in the Kansas City area qualify for the credit, the ad campaign paid off. Blue Cross has sold 227 plans to small businesses in the past three months—80 percent more than in a typical three-month period, says Tom Bowser, chief executive officer. Now, Blue Cross affiliates in other states are hoping to replicate the Kansas City marketing strategy—a combination of print ads, radio spots, and direct mail explaining the program’s advantages. The success “is tangible evidence that this legislation is having some effect,” Bowser says, “and we’re cashing in on it.”

The bottom line: Many small businesses can’t take advantage of a tax credit designed to reduce the cost of providing health insurance.

Lerman is a reporter for Bloomberg News. <a href=”mailto:esmith583 is a reporter for Bloomberg News.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

WSJ Piece on University Health Plans & Nat’l Reform

Big Foot on Campus

Why colleges want a waiver from ObamaCare.

In the movie “Animal House,” the hilariously loathsome Dean Wormer announces a pointless campus crackdown with the classic line, “The time has come for someone to put his foot down. And that foot is me.” Democrats seem to have had a similar inspiration and targeted student health insurance in ObamaCare. Along comes word that the bill “could make it impossible for colleges and universities to continue to offer student health plans.” That’s how the American Council on Education and a dozen other higher-ed lobbies put it in a recent letter to the Obama Administration, warning that the insurance coverage they offer may get junked by ObamaCare’s decrees.

Between 4.5 million to 5.5 million students annually are insured by short-term plans sponsored by their schools, which are tailored to upperclassman who have aged out of their parents’ coverage or to international and graduate students. These plans are very low cost because the benefits are designed for generally healthy young people and often organized around campus health services and academic medical centers.

All of which means these plans aren’t likely to qualify under ObamaCare’s “minimal essential coverage” rules that mandate rich benefit packages, even if colleges have the flexibility to make exceptions for special needs. And given that insurance must now be sold anytime to everyone, colleges may be required to continue to cover students after they’ve graduated—leaving this type of coverage unaffordable.

It doesn’t help that the regulations governing student health plans are as carelessly written as the rest of the bill, and the uncertainty is holding up insurance contracts and plan design for the coming academic year. Not surprisingly, the colleges are asking federal regulators for a blanket ObamaCare waiver. (Can everyone else apply too?)

All of this is no accident. The liberals who wrote the bill despise these campus health plans because they think every plan in the country should be designed in Washington and have been calling for a regulatory crackdown for years. Other Democrats probably had no clue about these rules, even as they voted for a bill that was so large and convoluted that no one could truly understand it. Either way, count this as another of ObamaCare’s really futile and stupid gestures, with many more to come.

Printed in The Wall Street Journal, page A14

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Kevin S. Wrege, Esq.

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4410 Massachusetts Ave., NW, #150

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Office: 202-625-1787

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Nat’l Media: DC Claims Out Front Role in HC Reform

D.C. In Front Of The Health Reform Curve, Officials Say

Topics: Health Reform, Medicaid, States

By Jessica Marcy

KHN Staff Writer

Aug 24, 2010

As states across the country scramble to meet the requirements for national health reform, the nation’s capital is “way ahead,” according to Dr. Julie Hudman, director of the Department of Health Care Finance and a member of the city’s Health Reform Implementation Committee. Mayor Adrian M. Fenty created the panel last May to explore how best to implement federal health reform.

At a recent public meeting, officials eagerly highlighted some of the city’s accomplishments. They noted that the District’s uninsured rate of 6.2 percent of residents is the second lowest in the country, only behind Massachusetts, a state that voted for near-universal health insurance almost four years ago.

They pointed out that Washington has already expanded Medicaid coverage, a key component of the new health care reform law that will be required in four years.

The city embraced an invitation by federal administrators to make people eligible for the program at up to 133 percent of federal poverty guidelines. As a result, D.C. officials successfully converted 32,000 residents from the D.C. HealthCare Alliance, a city program that had covers low-income residents who don’t qualify for Medicaid, into the program on July 1. Now, 188,220 residents are covered by Medicaid while 29,280 are covered by the Alliance, according to the Kaiser Family Foundation. (KHN is a program of the foundation.)

The D.C. government also sought federal permission to transfer an additional 4,000 residents who fall between 133 and 200 percent of the poverty level into Medicaid, an expansion Hudman said was a “win-win” scenario.

This step makes the city and Connecticut the only two jurisdictions to have expanded Medicaid coverage early. Both previously covered people under their own low-income health programs, which were more generous than pre-reform Medicaid requirements.

But such comparisons involving the District and states are often problematic because the former has a smaller population than most states and is an entirely urban area. The District heavy relies on public programs to provide insurance to poor and disadvantaged residents. More D.C. residents receive public coverage — including through Medicare, Medicaid and the Alliance — than other areas in the country and the city government picks up a large portion of that cost, according to the Urban Institute. Approximately 32.8 percent of D.C. residents receive public coverage. Another 55 percent receive employer coverage and 6 percent access it through individually purchased plans and military, veteran and student health programs, according to the Urban Institute’s 2009 DC Health Insurance Survey.

While officials praised expanded coverage, they noted that some of the citys poorer residents still have difficulty getting access to doctors and health care facilities.

“We need to be pushing for greater access to care,” said Department of Health (DOH) Director Pierre Vigilance. He emphasized the need for more access in emergency rooms, school based health programs and primary care clinics and doctors’ practices.

This is one of KHN’s “Short Takes” – brief items in the news. For the latest from KHN, check out our News Section.

Fenty Administration Health Reform Web Page

http://hc.rrc.dc.gov/hc/cwp/view%2Ca%2C1274%2Cq%2C463592.asp

The above link takes you to the District’s site on the local implementation of the federal health care reform law. While it’s a bit lean so far, I would expect it will be populated with more information as the reform process unfolds. Let me know if you have questions.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

DC Media: Provider Networks in DC

Friday, August 13, 2010

Narrow network health plans? Probably not in D.C.

Washington Business Journal – by Ben Fischer

Major health insurers will likely skip the Washington market as they test new plans that limit access to doctors in exchange for lower costs because the local work force is particularly unlikely to embrace such trade-offs.

In cities such as San Diego and New York, insurers United HealthCare Services Inc., Aetna Inc. and WellPoint Inc. are experimenting with “narrow network” plans, which promise premium cuts of up to 15 percent if patients are willing to accept fewer choices in doctors and hospitals.

The model, first attempted in the 1990s, was thought to be dead after consumer backlash, but some insurers are betting that recession-weary employers who pay their workers’ insurance premiums will reconsider now.

With the Washington area’s affluent population, high percentage of government workers and fragmented doctor and hospital market, however, insurers will continue to compete on access more than on price, say health care observers and company executives.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

DC Media: CareFirst Reserves Decision Delayed Again

Friday, August 13, 2010

Decision on D.C. insurance reserves pushed to October

Washington Business Journal – by Ben Fischer

D.C. insurance regulators won’t decide until at least October whether CareFirst BlueCross BlueShield’s premium-funded cash reserves are too big, according to an order published Aug. 6.

In a 26-page report, Gennet Purcell, commissioner of the D.C. Department of Insurance, Securities and Banking, said she cannot make a determination without knowing more about the impact that far-reaching federal health care legislation passed in March will have on CareFirst’s finances. Most of the record was developed in 2008 and 2009, before major congressional debate on the law.

Purcell reopened the case file until Sept. 30 and won’t make a final ruling until after then. By Sept. 3, CareFirst must provide detailed information and justification for costs associated with the new law. By Sept. 20, any members of the public or other experts may offer their own commentary, evidence or rebuttals to CareFirst’s information.

In 2009, the D.C. Council passed a law requiring Purcell to study the reserves held by CareFirst’s D.C. business unit, Group Hospitalization and Medical Services Inc.

Kevin S. Wrege, Esq.

President

PULSE Issues & Advocacy LLC

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

Office: 202-625-1787

Mobile: 202-253-4929

DC Media: CareFirst Reserve Decision

D.C. puts off CareFirst reserves decision yet again

Washington Business Journal – by Ben Fischer

D.C. insurance regulators won’t decide until at least October whether CareFirst BlueCross BlueShield’s premium-funded cash reserves are too big, according to an order published after the close of business on Friday.

In a 26-page report, Gennet Purcell, commissioner of the D.C. Department of Insurance, Securities and Banking, said she cannot make a determination without knowing more about how March’s far-reaching federal health care reform legislation will impact CareFirst’s finances. Most of the record was developed in 2008 and 2009, prior to major Congressional debate on the law.

“This information is critical in order to attribute the relevant weight to the several expert analyses under consideration,” Purcell wrote.

According to the order, Purcell re-opened the case file until Sept. 30, and won’t make a final ruling until after then. By Sept. 3, CareFirst must provide detailed information and justification for costs associated with complying with the new law. By Sept. 20, any members of the public or other experts may offer their own commentary, evidence or rebuttals to CareFirst’s information.

In 2009, D.C. Council passed a law requiring Purcell to study the reserves held by CareFirst’s D.C. business unit, Group Hospitalization and Medical Services Inc. Some community advocacy groups have argued that CareFirst allowed its reserves to grow excessively large while continuing to raise premiums.

CareFirst has argued its reserves are appropriate and necessary in case of a pandemic or other major medical crisis.

Friday’s order marks the third time the department has delayed the decision, which was thought to be imminent this past fall. Friday’s news also pushes the final determination beyond the Sept. 14 Democratic primary.

At the end of 2009, CareFirst’s D.C. division held $761 million in surplus, within the range recommended by private analysts. But D.C. Appleseed has argued that reserves as low at $365 million would serve the same purpose, and that statutes require nonprofit insurers to reinvest in the community.

The reserves have grown nearly 11 percent since early 2009 when the D.C. Council enacted the law paving the way for Purcell’s review.

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