As Insurers Cut Brokers’ Commissions, Consumers May Have One Less Resource

With open enrollment underway as of Tuesday, some health insurance brokers are already fielding questions about coverage and whether existing plans will still be available next year. For an increasing number of brokers, in California and elsewhere, there’s also another question: How much will they get paid, if at all?

Some insurers — including Cigna and Aetna — will not pay licensed agents and brokers a commission for helping people enroll in individual health insurance coverage for 2017 in many states, while others have reduced their commissions. They join UnitedHealthcare, which dropped commissions on new business this year in many states.

That is already prompting some brokers to step back from the exchanges when open enrollment begins this week, which could be a hurdle for consumers who normally would seek help from brokers in navigating the complexities of insurance coverage. (Government-supported navigators are still available.)

For the past few years, California insurers have cut commissions on individual and family plans sold in and out of the state’s Affordable Care Act exchange, Covered California, and some have announced they will slash them further next year, said Darci Gutierrez, an insurance agent in Dublin, Calif.

For instance, for most plans, Blue Shield of California currently pays agents 3.6 percent of the premium paid by first year enrollees, then 3 percent for every year the customer renews, Gutierrez said. But the insurer has informed agents that next year, it will reduce those amounts to 2.5 percent for first-year business and 2 percent for renewals, she said.

Anthem Blue Cross is also cutting commissions, she said. This year, it pays $16 per enrollee per month for the first year and $12 per month for renewals. For 2017, those amounts will drop to $12 and $9, respectively, she said.

Gutierrez said she’s frustrated because she spends hours with clients, calling plans to find out if doctors are in network, advising them on plan types and even sending out emails each month reminding them to pay their premiums. She makes her living from the commissions and won’t be able to dedicate as much time to work that doesn’t adequately compensate her, she said.

“I’m going to have to cut back on the hand-holding because I’m working for free at that point,” Gutierrez said. “I absolutely love working with the individuals and families. It makes me so angry that the insurance companies dictate that I can’t spend multiple hours with one client, researching and doing customer service anymore.”

About 45 percent of Covered California enrollees used an insurance agent this year, up from 40 percent during the first Obamacare open enrollment.

Insurance agents “provide an invaluable service not only at open enrollment, but post enrollment as well,” said Roy Kennedy, a Covered California spokesman. But the exchange does not dictate the commissions that insurance agents and brokers are paid by the health plans, he said.

In Nevada, where the largest carrier in the state has cut commissions for new business and another has dropped payments to $10 a month per customer, broker Vickie Mayville is weighing her options.

“It sometimes takes four hours to ensure clients have the right plan,” said Mayville, who runs her own agency in Las Vegas. “I will help my clients and anyone referred to me, but I’m not actively seeking out new clients.”

The changes to these payments come at a time when, for many consumers, selecting a plan may be even more complex than in the previous three years, as insurers drop out of markets and those that remain alter their networks of doctors and hospitals or make other variations to the 2017 plans.

“I’m trying to find coverage that will include my doctor, which is hard to find,” said Shelby Nathans, 31, who lives in Columbus, Ohio. This year, her plan’s insurer faced financial difficulties and was closed by the state. As a result, she had to switch just months ago to a new insurer, which she likes. But now she has learned her primary care doctor isn’t in the plan’s network for 2017.

Luckily, her father is a broker and he’s going to help her shop around: “If I were just your average patient or health insurance customer, I would have no idea what to do,” she said.

The federal government has not released information on brokers’ involvement at a national level, but patient advocates say they’ve been told by officials that across the federal marketplace, which will serve 39 states next year, a percentage of customers close to California’s 45 percent uses the services of brokers. Even larger percentages among the estimated 6 million people who buy coverage outside of the state and federal marketplaces are likely to use brokers.

And that, some advocates say, is why problems could be brewing. If brokers cut back their client lists as a result of the reimbursement changes, that could result in “lower enrollment for the exchanges, which really hurts everyone,” said Marcy Buckner, a vice president at the National Association of Health Underwriters, the brokers’ lobbying arm.

Commissions have long been part of the market for insurance plans sold to individuals and families who don’t get coverage through their jobs. The commissions are built into the premiums that insurers charge, which are filed with state regulators. Some pay a percentage of the cost of the plan, while others set a flat-dollar rate per application.

Brokers say they sort through insurers’ networks of doctors and covered drug lists, helping clients choose a plan that includes the providers and drugs they require. During the year, they’re also available to assist if problems with coverage or claims arise.

In some states, brokers are allowed to charge consumers a fee for their services, so long as they disclose it up front. Matthew Byrne, a broker in Dublin, Ohio, charges a $50 consultation fee for new clients to help walk through the process, whether or not they buy a plan. While still not common, Byrne expects that more brokers will do so as commissions decline or are eliminated.

To be sure, many consumers sign up or renew online with no additional help.

Others get help from call centers as well as navigators or assisters who are paid by the state or federal marketplaces where consumers shop for coverage. They can show consumers their options and aid in the enrollment process but cannot recommend specific plans.

Advocates are optimistic that there will be sufficient help offered by navigators and assisters this year — even if they see more clients because brokers move away from the health exchanges.

“We feel that navigators and assisters are in a strong place this year to help consumers enroll or renew their coverage,” said Rachelle Brill, policy analyst with Community Catalyst, a Boston-based nonprofit advocacy group.

Still, brokers are really important in making sure people don’t “slip through the cracks.”

Brokers and policy experts say insurers’ decisions come for two main reasons. First, they’re under pressure to keep premiums from growing too much — and to meet rules in the Affordable Care Act that they spend no more than 20 percent on costs, profits and overhead, the companies are looking for ways to cut costs anywhere they can.

Second, some don’t want much new business. Rules in the law that keep them from rejecting people with health conditions have meant higher-than-estimated costs for some insurers, which have substantially reduced their participation in state and federal marketplaces, saying they are losing money on that business sector.

“They would rather have less business than more,” until the profit outlook improves, said consultant Robert Laszewski, a former insurance executive who advises the health care industry.

Cigna spokesman Joe Mondy said the company decided to cut commissions entirely for 2017 to reflect “the evolving reality of the individual marketplace.”

At Aetna, which has pulled out of 11 states for its products sold on the public exchanges, spokesman Ethan Slavin sent a statement saying the insurer considered “the financial losses” the firm experienced in the public marketplaces and “took a careful look at our sales and compensation strategies for off-exchange products” in deciding to cut commissions in 14 states for 2017. It continues to sell through the marketplaces in four states.

Meanwhile, the changes in reimbursement have prompted concern from some regulators.

Nevada’s insurance commissioner in September warned insurers that changes in reimbursement might run afoul of the law. In Connecticut, regulators, alarmed that insurers had cut commissions entirely, hired 21 brokers to help out at the state’s health insurance call centers and storefronts. And California reminded the insurers that it requires them to offer commissions on products they sell through its marketplace.

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