When a professional broker enrolls a client in a health insurance plan, his job has often just begun. These agents provide a variety of ongoing services to businesses and individuals, such as implementing employee wellness programs, procuring authorization for medical treatments, evaluating and explaining coverage details, and sorting out claims issues. Some agents serve as de facto extensions of their small business clients' HR departments.
Yet customer services provided by agents have somehow escaped the attention of long-standing industry critics who are focused on keeping agents’ commissions as part of medical loss ratio calculations.
The MLR is used to determine what portion of insurers' income is spent on “medical costs,” which under last year’s health care law must be 80 – 85% of premiums.
One group fighting to diminish the role of the agent by including commissions in the MLR tried to label agents as mere “salespeople” in a recent Insurance & Financial Advisor article. Still, the critics haven’t explained who will fill critical customer service roles if they are successful in removing agents from the health care system.
“Agents receive an average of 223 requests each year from clients who are having difficulty resolving health insurance claims,” said NAIFA President Terry Headley, citing the results of a survey of NAIFA members. “These highly trained, state-licensed professionals routinely work with the insurance companies and medical providers to settle disputed and misfiled claims, thereby keeping their clients happy and taking pressure off state insurance commissions. And that’s just the work they do on claims issues.”
Said one member who participated in the NAIFA Survey: “The health insurance consumer will be woefully underserved if you take the agent out of the delivery and service system! We have clients who depend on our service and support not only in the claims process but in resolving premium payment issues, coverage choices, application processing, etc. If the government dismantles the current system, efficiency will decline, costs will increase and the U.S. economy will suffer.”
Many agents have already seen their commissions reduced by up to 50% as insurance companies scrambled to comply with the MLR requirement. A similar reduction in premiums has not resulted. As agents see their compensation decline, they have little alternative but to stop providing many of the services that have protected consumers and mitigated costs.
“Removing agent commissions from the MLR won’t have any impact on premiums,” Headley said. “But leaving them in will seriously dilute customer service.”
NAIFA urges Congress to modify the health care law to remove agents’ compensation from the MLR calculation. As the health care system grows more complex, the role of the agent is more important than ever and must be preserved.