Agents Scramble To Begin Transition To New World Of Health Insurance Sales

The problem is that there are far more questions than answers right now, with years to go until all parts of the massive health insurance reform bill fall into place, and many regulations to be written.

Meanwhile, queries are coming in fast and furious from producers, who themselves are being inundated with requests for clarification from their group and individual health insurance buyers.

"We've been drinking from the firehose of questions about how employers will need to adjust to the legislation now and in the coming years," said Mr. Kopperud. "There are a million moving pieces of health reform, and there's not a single employee or employer who won't be impacted by it."

At the same time, he noted, the fact that clients are coming to their agents and brokers for information demonstrates their value in the distribution chain.

"It's gratifying to be reminded again about the essential, core value equation that sophisticated brokers bring to their customers at a time of confusion and anxiety," he said.

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, added that since the new health care law will impact 18 percent of the economy, it "will undoubtedly present both challenges and opportunities for IIABA members."

He said it is "impossible to have a grasp of the full impact" on insurance agents, both as small businesses and as health insurance professionals, until regulations are issued on how each of the provisions will be implemented in the coming years.

He said IIABA expects a number of challenges during this phase, including additional financial burdens and new taxes on small business. "However, given that there could be as many as 16 million new Americans obtaining insurance through private insurance plans, there could also be new business opportunities for agents and brokers," he noted.

Mr. Symington said IIABA also anticipates that, especially for the next few years, many customers, especially small businesses, "will find this new, complicated law and the resulting regulations very challenging." As a result, he said, "they will need an experienced agent and a trusted advisor to guide them through the process of obtaining health insurance more than ever."

Leonard Brevik, executive vice president and chief executive officer of the National Association of Professional Insurance Agents, said that since the health care law was enacted, "the action has focused on two tracks–the politics and the practical."

He cited lawsuits filed by 13 state attorneys general challenging the constitutionality of the new law, and noted that Republicans have announced repeal as one of their top priorities. "So the situation may change as a result of the electoral or the judicial process. But until then, we must operate as if the law will continue," he said.

"As a practical matter–like it or not–as of now, health care reform is the law of the land, and we must deal with that reality in a way that protects the business interests of independent agents," Mr. Brevik said.

He added that PIA "will pivot and focus its efforts on protecting the interests of agents during what will be a long implementation process at the state and federal levels."

Mr. Brevik said PIA's goals include ensuring that independent agents will continue to be able to sell policies, "that they will be fairly compensated, and that agent compensation will be set by the marketplace, not by federal bureaucrats attempting to set or impose arbitrary compensation schedules."

At the same time, he said since PIA supports state insurance regulation, "we are pleased that state departments of insurance and the NAIC have a continuing role in the process. We also note that the new law did not mandate a wholesale dismantling of the private insurance system."

Still, agents and their clients may be operating in the dark for quite awhile.

On its Web site (www.iiaba.net), IIABA posted a short "Agent Overview" about health reform. Its author, Margarita Tapia, director of public affairs, wrote that while IIABA "is working overtime to analyze [the law's] impact on agencies that sell health insurance, unfortunately, many of the specifics affecting agents' ability to sell health insurance will be somewhat of a question mark as the law's implementation occurs over the next four years."

Indeed, she noted, "many of the details of how coverage will be placed will be determined by regulations issued by the Department of Health and Human Services and individual states in the years to come."

In particular, agents are worried that implementation of the law's health insurance exchange system in 2014 will curtail the ability of producers to serve the individual and small-group health markets, according to an official with a Washington trade group who works closely with the National Association of Insurance Commissioners.

"The concern is that the exchanges will exclude [producers]," said the official, who asked not to be named. "And the fear is that the perception that agents 'only look out for themselves' will grow down the road" as states work out how to manage and regulate the exchanges and decide where agents fit into the process.

The IIABA acknowledged that concern in its Web summary, noting "the legislation leaves much of the details of the operation of these exchanges to each state. While agents will be able to place coverage for clients through the exchanges, the marketing or commission regulations are not yet clear."

In addition, IIABA warned, "consumers will be able to go directly to the exchanges without the assistance of an agent, and some consumers may end up choosing to do so."

Regarding the exchanges, which will be regulated by the states, the HHS has selected a familiar face in insurance circles–Jay Angoff, former Missouri insurance commissioner and former health regulator in New Jersey–as its liaison with the NAIC.

Mr. Angoff was "brought on as a senior advisor at HHS, and he'll play a key role in a new office to be created that oversees the private insurance market," said Nicholas Papas, a representative for the agency.

Another industry group trying to help fill the information void is the National Association of Health Underwriters (www.nahu.org), which represents health and benefits agents and brokers.

Jessica Waltman, NAHU's senior vice president of government affairs, said her group is holding webinars to explain the legislation's impact–especially on the provisions that must be implemented promptly. "We get hundreds of questions," she noted.

Ms. Waltman made clear NAHU is hopeful it can secure major changes in the law to deal with provisions it fears will have a major impact on agents going forward.

However, Ira Loss, a Washington health care analyst for institutional investors at Washington Analysis, believes any hope for additional tweaks in the law anytime soon is "just not politically feasible."

"It's futile," he said. "Opponents [of the current reform law] won't have the votes, and they don't have a president who will support major changes."

While acknowledging the political facts on the ground, Ms. Waltman noted that NAHU will strive to help agents cope while continuing to push for needed alterations.

"While we will be seeking legislative changes to provisions that we would find hard to live with, there are some that go into effect immediately or almost immediately" that agents must deal with, she said.

A critical problem is that health insurance plans expire at the end of every month, and the market reforms that will be implemented in the near future affect the individual and small groups that are predominately served by agents. Also affected are self-insured plans, according to Ms. Waltman.

She noted that under the new law, grandfathering provisions pick up immediately. For example, insurers won't be able to drop coverage for a person who develops a health problem and no longer will be able to set yearly or lifetime limits on coverage. Health insurers cannot make any changes to a policy besides adding or subtracting employees, or to reflect changes made through collective bargaining agreements, she said.

She also cited confusion over a new small employer tax credit under the law. "While we are being told that only 12 percent of employers will be affected, it is still unclear how that credit will work," she said.

Other provisions that will go into effect promptly and which must be incorporated into new policies are preventive care at the first-dollar level and how to deal with children who graduate in June who are covered on their parents' plans.

Since a provision allowing them to stay on their family coverage until age 26 won't go into effect until October, it is unclear whether they should be advised to get individual plans or to wait until they can get back on their parents' plans.

HHS must also create a temporary high-risk pool program by the end of June to help people who can't get insurance because of costly, preexisting medical problems.

Meanwhile, Ms. Waltman noted, "no regulations have been written, and it is unclear when they will be written."

"There are a lot of questions," she said. "But there are no answers yet."