Do insurers game system by cutting agent fees?
Move restricts when and what health care plans patients might buy
Insurers increasingly are dropping agents’ commissions to discourage the sale of the Affordable Care Act plans they’re losing the most money on, especially when the consumers are more likely to be sick, according to health care industry officials and experts.
The moves by nearly every major insurer over the past few months are often focused on times of the year and plans that attract the sickest people and are starting to prompt action by state officials and legislators. Some, including the head of California’s state insurance exchange, say federal regulators should help assure consumers get the help and plans they need, especially during special enrollment periods such as when they lose jobs or move.
Some insurers, including Anthem and Humana, say they dropped commissions to keep rates down. Humana spokesman Mark Mathis said the insurer believes agents are “an important source of information and guidance,” but it sometimes makes “changes in order to maintain sustainable and affordable health plans for our members.”
Others say insurers are cutting commissions to save money by reducing the number of sick people who enroll.
California and Colorado require insurers to pay commissions and Connecticut recently required United Healthcare to pay them there because its rates were approved with them. Legislators in states including Georgia and Louisiana are considering bills to regulate the issue.
“It flies in the face of the ACA ... to say in code to agents, ‘Don’t bring us sick people,’ or to make it harder for some to enroll,” says Peter Lee, executive director of the Covered California exchange.
People who lose their jobs are most likely to quickly sign up for insurance if they’re sick, says Larry Levitt, senior vice president of the Kaiser Family Foundation.
Insurance agents now enroll about half of those who buy insurance on the government exchanges. Low-income people tend to have more health problems, need to buy their plans on the exchanges to get subsidies.
Blue Cross and Blue Shield of Michigan, which pays commissions, has found that 80% of consumers are eligible for subsidies but only 40% know that upfront.
Aetna, United Healthcare and Cigna have all complained they’re losing money on ACA plans and enrollment drops off sharply as subsidies fall. A study out last week by the Blue Cross Blue Shield Association found the cost of medical care for those newly enrolled in ACA plans were 19% higher in 2014 and 22% higher in 2015 than those who were insured through employer plans by BCBS companies those years.
The Centers for Medicare and Medicaid Services called the report “seriously flawed,” however.
Insurance was supposed to be easier to buy, Lee and Levitt say, so it was assumed agents would not be needed to buy ACA plans. The opposite happened, however, as fewer states than expected created exchanges, the federal HealthCare.gov site had massive problems, and Republicans in Congress kept the federal government from hiring more “navigators” to help people use the site and health insurance system to buy policies, says Levitt.
“If agents are not paid, the consumer loses because they have to travel down this road alone,” agrees Ronnell Nolan, CEO of Health Agents for America.
Some insurers, including Humana, dropped commissions on different types of plans in different states, especially gold and platinum plans, which Levitt says attract those with more health problems because of their low deductibles. Aetna recently eliminated commissions on all new individual plans with effective dates from March 31 to Dec. 31.
Robert Wood Johnson Foundation’s insurance coverage director Katherine Hempstead considers dropping commissions a “cry for help” by insurers as it shows “there are some products they really don’t want to sell.”