Insurers Cut Commissions to Restrict When and What Plans People 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 last few months are often focused on times of the year and plans that attract the sickest people and 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 when they lose jobs, move or have babies.

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.

“Many states are looking at doing whatever can do to support to agents in their states and not allow health plans to game their commissions so they enroll only healthy people,”  Peter Lee, executive director of the Covered California exchange, said in an interview. “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 enroll.”

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, who has discussed the issue with insurance company actuaries and state and federal ACA exchange officials.

Insurance agents now enroll about half of those who buy insurance on the government exchanges. Low-income people, who tend to have more health problems, need to buy their plans on the government websites to get federal subsidies and often need the most help.

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 Tuesday 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 (CMS) called the report “seriously flawed,” in large part because those with serious health problems trying to buy individual insurance could be discriminated against because of their conditions before the ACA took effect.

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 created their own exchanges than expected, the federal site had massive problems and Republicans in Congress kept the federal government from hiring more “navigators” to help people navigate the site and health insurance system to buy policies, says Levitt.

Despite improvements with the exchanges, many consumers still need help, says Lee, who acknowledges he was wrong the exchanges would “make buying insurance as easy as buying a book on Amazon.”

The process is especially confusing for consumers eligible for subsidies. Blue Cross and Blue Shield of Michigan, which still pays commissions, has found that 80% of consumers are eligible for subsidies, but only 40% know that when they first contact the company, spokesman Andy Hetzel says.

“If insurance agents are not paid, the consumer loses because they have to travel down this road alone without an expert,” agrees Ronnell Nolan, CEO of Health Agents for America.

Some insurers, including Humana, have dropped commissions on different types of plans in different states, especially gold and platinum plans, which Levitt says attract people with the most health problems because of their low deductibles. While Humana dropped commissions on these plans after open enrollment ends, others including United Healthcare nearly eliminated them altogether for 2016 plans for individuals and families. Aetna recently eliminated commissions on all new individual plans with effective dates between March 31 and Dec. 31.

Katherine Hempstead, director of the insurance coverage team at the Robert Wood Johnson Foundation, says dropping commissions should be seen as a “cry for help” by insurers as it shows they are “signaling that in the current market there are some products that they really don’t want to sell.”

Insurers have criticized the federal government for allowing customers to abuse the special periods by signing up for insurance when they needed health care and then dropping insurance after the crises had passed. CMS recently limited the circumstances that allow people to sign up for the special enrollment periods.

A bill passed the Georgia House last week that would require insurers there to pay agents a minimum commission, but it failed to make it through the Senate. The Louisiana state House is expected to vote on a bill within days that would require insurers to give agents 90 days notice before dropping commissions.

Under the ACA, insurers have to spend 85% of premiums on medical care, leaving only 15% for overhead, including commissions. Insurers started reducing the size of commissions soon after the law passed.

Pennsylvania state Rep. Frank Farry, a Republican, is researching whether to introduce legislation requiring insurers to pay commissions, but worries that requiring them to spend a portion of the 15% on commissions could “put them in a pinch.”

Earlier this year, the Connecticut Insurance Department blocked United Healthcare from eliminating commissions because the company included them in its 2016 rate filing that was approved. The insurer instead reduced its commission from $20 to $10 a month.

Colorado and California both require commissions for agents.

Lee, of Covered California, urged Health and Human Services Secretary Sylvia Burwell in January to mandate minimum commissions year-round to prevent insurers from steering certain consumers from their plans.

CMS spokesman Aaron Albright declined to comment about the commission cuts, but said in an emailed statement that, “Whether through, the call center, navigators, enrollment through an agent or web broker, consumers have many channels to choose from most convenient to them.”

Source Link