NU Online News Service, March 13, 12:57 p.m.EDT

WASHINGTON—Health exchange regulations finalized by theObama administration Monday envision allowing agents, brokers andprivate companies, to sell coverage on the exchange to individualsand employers through privately-run websites.

In a report issued by Beth Mantz-Steindecker, John J. Leppardand Ira S. Loss of Washington Analysis, a Washington think tank forbuy-side security analysts and brokers, they say the rules providegreat flexibility to the states to carve out a key role for agentsand brokers.

The provisions related to the private market were stipulated onan interim final basis, the analysts say, meaning that the federalDepartment of Health and Human Services (HHS) will review publiccomments and then determine whether to finalize them, alter them,or remove them.

However, they add it is unlikely that private companies will bepermitted to assess consumer eligibility for premium subsidies,cost-sharing arrangements, or other affordability programs.

“Compensation mechanisms for these entities will be determinedby the state,” the analysts say.

The analysts went on to say that with Republicans currently incontrol of the majority of state governments, and with mostDemocratically-controlled states placing an emphasis on initialinsurer participation rather than restrictive control, “we thinkthat this rule sets the framework for more market-driven exchangesthan some have feared.”

The analysts' comments were supported by officials of theNational Association of Insurance and Investment Advisors.

Robert Miller, NAIFA president, says that while NAIFA staff isstill analyzing the 644-page document, “we are encouraged by theconsistent recognition for the role of the agent and broker.”

He says, “We believe the interim final rule which permitsagents, brokers and private companies, to sell coverage on theexchange to individuals and employers should be finalized.

“State flexibility may result in more market-driven exchanges,”he notes.

Officials of the National Association of Health Underwriters,whose members will be most directly affected by the exchanges, saythey are still evaluating the rules for their impact on itsmembers.

They did caution that the regulation merely provides aregulatory floor, and that states are free to enact conditions ofparticipation above and beyond those outlined by HHS.

“This could include limitations on the number of insurerspermitted to offer plans via the exchange or even an activeexchange model whereby exchanges “negotiate” premiums,” say theWashingtonAnalysis authors in their report. “Still, theemphasis at this point remains on participation.”

Other sources say some of the functions that will be theresponsibilities of the states include certifying qualified healthplans; operating a website for comparing plans; running a toll-freehotline for consumer support; providing grants to “navigators” toassist consumers; determining eligibility of consumers; and helpingconsumers enroll.

Other sources note that certain elements of the plan willdisappoint insurers and consumers.

PoliticoPro, for example, says, “Insurers, wanted lessdiscretion for states—they wanted HHS to prevent exchanges fromimposing requirements on plans in the exchanges beyond what isincluded in the health care reform law.”

Another concern cited by PoliticoPro was that consumer groupswanted fewer insurers on the exchange board, but up to half of aboard can represent insurers, the rules say.

However, the final rule, which goes into effect in 60 days,mandates that representatives of insurance issuers, agents,brokers, or others licensed to sell insurance may not constitutethe majority of an exchange board.

Furthermore, at least one voting member of the board must be adesignated consumer advocate.

The analysts say that states will be given broad discretion indevising methods to ensure that their exchange is financially ableto perform all of its required functions.

“This will likely include some manner of user fees orassessments on participating issuers,” say the analysts.

“While HHS encourages states to study the impact of variousfunding arrangements on risk selection, insurer participation, andprovider contracting, the ultimate determination will be left up tothe state,” they say.