Last week, several Blue Cross and Blue Shield companies said they would halt commissions to brokers selling their individual health plans in the ACA marketplaces, following others including UnitedHealth, Anthem, and Health Care Service Corp.
Eliminating or reducing commissions not only saves money on that front, but also perhaps intentionally reduces the marketing of those plans by brokers and stifles enrollment, helping insurers minimize losses on plans that have turned out far more costly than bargained for.
What further impacts will such tactics have on insurers and brokers? Some experts suggest the effects are likely to extend to overall ACA enrollment, which could in turn impact the success and future of the program.
“A best-case scenario is that the brokers will avoid selling the plans and enrollment grows slowly or stays at current levels so that losses can be contained,” says Jim Giordano, partner and national director of value-based care in Kurt Salmon's Health Care Group.
By keeping the plans available but not actively marketed, insurers fulfill their commitment to offer plans while avoiding growing enrollment for those in which adverse performance and adverse selection exist, Giordano says
Broker perspective
“The broker market for ACA plans has basically dried up,” says Steven Shill, partner and a national leader of The BDO Center for Healthcare Excellence & Innovation.
“There has also been a significant decline in individually underwritten plans, where, in the individual market, that is where the action was," Shill says. "This has been driven by the individual mandate and website access being set up but also through private exchanges.”
He sees brokers now focusing on corporate accounts, most notably the small employer groups that are now signing up employees. “We are seeing private exchanges coming out of this and are working with clients on doing just this,” he says.
Some concern may exist around the idea that brokers will focus on selling plans that pay commissions rather than focusing on finding the best fit for their clients.
However, Noah Lang, CEO and co-founder of Stride Health, a national online insurance broker for individuals and self-employed, says commissions are not always the driving force behind brokers’ sales.
“Web-based brokers like Stride can afford to be commission-agnostic in making recommendations," he says, noting it uses software to help consumers make decisions, unlike traditional brokers and agents.
Lang suggests that overall, the hit to brokers across the industry will affect enrollment figures, more so during special enrollment than during open enrollment.
"The special enrollment period requires a lot more hand-holding in order to get enrollees across the line, particularly as the rules are shifting," he says. "A typical agent is going to struggle to deal with the cost of assisting an individual through the process of qualifying for coverage in the middle of the year if there is no commission."
Payer perspective
Giordano believes insurers need to work around the fact that exchange plans have been loss leaders.
“It stands to reason some payers are seeking to minimize enrollment and costs until they can legally exit the plans,” he says. “United Healthcare is projecting a $700 million loss on its exchange plans in 2016, and other insurers are having the same experience.”
Giordano does not read further into insurers’ cutting of commissions, though the move can highlight the impact of insurers’ support or lack thereof on ACA enrollment.
“Insurers are running a business. I do not think this has political overtones,” Giordano says. “Their willingness to participate will hinge on the viability of the model. It seems as if the payers are simply reacting to market forces.”
Yet Lang suggests the commission cuts may in fact have political overtones.
“The carriers are putting pressure on regulators to further clarify rules and reduce abuse of the system,” Lang says. “The shifts in commissions structures are likely a blend of signaling their level of consideration of the issue to Washington, while also discouraging traditional agents during certain times of the year.”