NU Online News Service, Feb. 16, 3:07 p.m.EST

The role that insurance agents play in the health marketplace in2014 and beyond will likely be left up to the states, said JoelArio, head of the insurance exchange bureau of the federalDepartment of Health and Human Services (HHS).

Consistent with comments made by Kathleen Sebelius, HHSsecretary, on Tuesday before the Senate Finance Committee, Mr. Ariosaid HHS prefers that states manage the exchanges and that thefederal government will step in "only if there is noalternative."

Speaking at the annual Capitol Conference of the NationalAssociation of Health Underwriters (NAHU), Mr. Ario also promisedthat states will have flexibility in determining the role of agentsin the "navigators" system—a component of the health care law thatagents fear is designed to limit or eliminate their role inthe health care system.

Mr. Ario said states will have significant flexibility to defineexchange "navigators," with each state likely to be given theauthority to decide whether its navigators must be licensed.

"The intent of the navigators is not to replace agents," Mr.Ario said, but to reach out to "hard-to-reach populations notcurrently served by agents."

He explained that this market segment included the "lessaffluent who are going to get coverage through the exchanges."

He added, "I don't see a conflict between the agents and thenavigators."

In later comments, Susan Voss, Iowa insurance commissioner,appeared to imply that the states, too, envision a strong role inthe exchanges for agents.

She did so by strongly endorsing agent involvement in marketingof all health insurance products, noting that state insurancedepartments "just don't have the people to serve the consumer theway the agents do today."

Mel Schlesinger, incoming NAHU president and an independentagent in Winston-Salem, N.C., said he took Mr. Ario's remarks toindicate that HHS "is pretty open" to hearing what everyone's viewsare and is also seeking to be "fair and impartial" in decisionsregarding the future of the health care marketplace.

He also made clear the views of agents regarding the sensitivenavigators' issue.

"There are strong incentives for agents to go after theunderserved population," Mr. Schlesinger said.

In the past, agents did not seek out these potential customersbecause they could not afford coverage, he said. But, he added, "ifthere are going to be navigators, they still need to be licensedinsurance agents. Even if the navigators are accessed through callcenters, they should be licensed agents."

He concluded, "If they are going to make recommendations toconsumers, if they are going to understand the industry, whyshouldn't they be licensed?"

Also brought up at the NAHU meeting, Rep. Mike Rogers, R-Mich.,said he will sponsor legislation in the coming weeks that wouldexempt health insurance agent commissions from the medical lossratio formula.

Currently, the medical loss ratio formula requires that insurerspay agent commissions out of the 15- to 20 percent component ofhealth care premiums reserved for administrative expenses.Insurance agents have argued that their commissions should notcount toward administrative expenses.

In her comments, Ms. Voss said that agent commissions should bepart of the 80- to 85 percent of premiums reserved for medicalexpenses.

She explained that commissions on the sale of health insurancepolicies "don't go to the bottom line" of health insurers but arefees paid to health insurers only to reimburse agents for servicesthey provide.