Insurance Brokers Apprehensive About Health Exchange

Dec 18, 2012

In less than 10 months, Washington state will launch its own health exchange as part of the Affordable Care Act. The exchange will be an online marketplace where people can buy health insurance with the help of a navigator.

Some say it will be like Expedia for health plans, and this has some insurance brokers worried. Many fear it will have a negative impact on their livelihood, just like Expedia removed the need for travel agents.

Sarah Freeman is an insurance broker and fall is usually a busy time of year for her. It’s open enrollment season; that’s when people can choose to stay with their current health plan or switch to a new one. She spends a lot of her time with clients, explaining their health plan options and different benefits.

Freeman says her job is more than just selling health insurance. It’s like being a matchmaker, finding the right health plan for her clients based on their situation. Freeman first tries to get a sense of what her clients need by asking very specific questions.

“I often start with their providers.  A lot of people are really attached to their doctors so you don’t want to put someone in a plan that they can’t continue to see their own doctor," says Freeman. "So it’s a conversation and figuring out, based on what they’re looking for, and what their objectives are.”

Freeman says those small and sometimes personal details help her narrow down the plans that will best meet her clients needs. People may think brokers work for insurance companies. They’re paid sales commissions, but Freeman says they really work for the client.

“I have a lot of times have had to do appeals on claims for a member because something wasn’t paid properly or they felt something had to be paid. Sometimes having somebody there to help walk you though the process -- we have enough information on how the insurance company works to be useful,” Freeman says.

Booking a flight and hotel, it's not as intricate as someone's health.

When the state’s health exchange opens next fall, Freeman wonders how much of a dent it will have on her business. Within the exchange, there will be navigators who can help customers with questions, but it’s not clear if these navigators will replace brokers like her. And if they do, will the navigators have to follow the same regulations that apply to brokers? Will they need to be licensed and be required to carry liability insurance? Will they have the same training and experience as brokers?

“We sit down and really try to think about the worst case scenario for the individual as well as how they use their plans on a day-to-day basis,” says Freeman.

So to say that shopping for health plans is as simple as shopping for the lowest airfare online is a flawed idea, says Freeman, “because with booking a flight and hotel, it’s not as intricate as someone’s health."

What Washington Can Learn From Massachusetts

Washington’s Health Exchange Board is still working out a lot of details, including how the exchange and brokers can co-exist. It has an advisory committee that includes people from the industry.

One state that wrestled with these issues years before the Affordable Care Act was signed into law was Massachusetts.  Its health exchange, the Health Connector, has been up and running for more than six years. Executive director Glen Shor says the health connector was set up to help users like families, small businesses and insurance brokers. Yes, brokers. He says the goal wasn’t to replace brokers, but to offer them another tool to do their job.

“They have a lot of expertise having worked with small businesses for a long time. We want to build something they can use, because at the end of the day, we think there’s tremendous potential to fashion win-win-win-wins all around," says Shor.

Massachusetts has also set up call centers for anyone who has questions, including brokers. That doesn’t mean Massachusetts has it all figured out, but Shor has advice to states that are building their exchange. “It’s important to build many avenues for engaging brokers -- formal, informal avenues -- start explaining that you’re not here to push them out of the market, but to work with them," says Shor. "Take their input and hone the exchange value proposition so that it has something new and great for brokers and their small employer clients.”

In other words, take their suggestions to make the exchange appealing to brokers.

The exchange doesn’t roll out until 2013. It’s months away, and many in the industry are anxious for information now. Insurance broker Sarah Freeman says it’s not just because she wants to know whether she’ll have a job. Her clients are looking to her for answers, too.

“Like today, I met with four clients, and all four asked what happens in January 2014? And it’s hard for me to say, we don’t really know. There are so many moving pieces, so many parts of it that’s a big unknown,” says Freeman.

For now, all Sarah Freeman can do is stay on top of news coming from the Exchange Board. She says she wants to stay informed so she’ll be ready when the big change finally comes.