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February 9, 2015

Broker's Dilemma: Agents encounter rocky start selling Obamacare plans

PHOTO | Pablo Robles Newington health insurance broker Joe Massa gives Access Health CT credit for improving its website over the past year, but he said enrolling clients in exchange plans is still time consuming and not a high-margin business. 

Connecticut's decision to use brokers as a key piece of its strategy to sell health plans through the state's insurance exchange has boosted enrollments and earned local insurance agents millions of dollars in commissions.

That's the good news, but it doesn't tell the whole story, according to brokers interviewed by the Hartford Business Journal in recent weeks, as they were scrambling to complete signups for the second enrollment period.

Some brokers say friction and frustration permeates their relationship with Access Health CT — the state's insurance exchange.

Broker's gripes include IT and website glitches, lackadaisical customer service from the exchange's call center and poor communication between them and the exchange. The end result, brokers say, is that some of their clients have received delayed coverage or left the exchange altogether, sometimes resulting in lost commissions.

Meanwhile, brokers are also questioning whether doing business with the exchange makes economic sense. While commissions aren't necessarily a big issue, brokers say enrollment headaches have forced them to spend a longer amount of time advising each client, cutting into their earnings.

For its part, Access Health says it has been working to improve its systems and communication with brokers. Exchange officials say they view brokers as vital to the continued success of Access Health CT, which has been lauded as a model for other states.

“I don't like to say I'm a negative person overall, but the experience has been very negative and time consuming,” said Mark Czarnecki, who co-chairs Access Health's broker advisory committee and owns a Branford insurance agency that has sold individual plans through the exchange.

Czarnecki said he decided in January to take a temporary hiatus from selling Access Health plans, unless a valued client asked for a quote.

“It's my lowest profit-margin business and it's starting to take up all of my time, to the detriment of my loyal customers,” he said.

Connecticut brokers aren't alone in their frustrations.

A February study published by the Urban Institute found that, while brokers have been key players in boosting the sales of exchange plans in 21 states, many agents are dissatisfied with IT systems, lack of compensation for enrolling Medicaid patients, and problem solving with exchange personnel.

Mixed reviews

Connecticut brokers say some clients are easy to sign up, but others run into problems — with income documentation or other paperwork — that can take hours to resolve. Dealing directly with insurance companies is much easier and more efficient, a number of brokers said.

Steven Glick of the Chamber Insurance Trust in Orange, who is also a member of the exchange's broker committee, said brokers feel like they are doing more work for less money than in the past. Part of that stems from the exchange's enrollment complications, but federal healthcare reform in general has also lowered some broker commissions due to the law's limits on medical expense ratios. Meanwhile, plenty of consumers are buying insurance through a website or call center, rather than from a broker. Glick said he worries that brokers could eventually go the way of the travel agent — replaced by technology.

“For certain brokers, [exchange business has] been a boost,” Glick said. “But the agents I've talked to are becoming very frustrated because their value has diminished and their compensation has declined.”

Rob Hecker, a broker with Morin Associates in Groton, said his agency has sold approximately 1,000 exchange plans since 2013.

But some of his clients' income and enrollment information in the exchange's computer system would mysteriously change, sometimes in the wee hours of the morning, while other clients were unenrolled from plans or placed in a different one, he said.

“We're happy with the added business, but there are definitely things that could change that would make the process much easier to navigate,” Hecker said.

Joe Massa, a Newington agent, said Access Health plans represent nearly one-third of his business. He encountered some technical frustrations early on, but he said the exchange has made improvements that have helped.

“The website in Connecticut is very good,” he said. “I really like it a lot.”

Still, Massa, who has been selling Access Health plans since the exchange launched, said he has yet to turn a profit on them. Many of his exchange enrollments, he said, have been existing clients whose prior insurance plans were discontinued due to new requirements under the Affordable Care Act.

Broker culture changing

Chris Mele, Access Health's broker marketing and sales manager, said he understands brokers' concerns. He formerly worked as an insurance agent for Anthem Blue Cross and Blue Shield.

He said brokers are the single most important sales channel for Access Health, and part of his job is to be a liaison between brokers and the exchange.

Mele said many brokers are used to dealing directly with insurers, which can handle technical problems in house. But the exchange process can be more complex since Access Health acts as a middleman between insurance agents and health plans.

“Brokers are on the spot and they want something today and they're meeting with someone today, and I understand that completely,” Mele said.

To alleviate brokers' concerns, Access Health has created a team of 10 to 20 specialists who work to fix systemic computer problems that arise for insurance agents and their customers, Mele said. And Access has been updating brokers several times a month with emails letting them know what fixes are in the works and how to proceed in the meantime, he said.

Josephine Sempere, the exchange's training and education manager, said despite some brokers' complaints, interest in selling exchange plans is growing. Almost 700 brokers have now taken the required training course to sell exchange plans, she said, up from 600 a year ago.

“In the beginning it was a brand new system to everybody,” she said. “Now we have a handful [of brokers] that have sold 700-plus plans.”

Calculating commissions

Gripes about Access Health aside, the industry's shift away from employer-sponsored health plans means brokers are signing up more people for individual coverage, which takes longer and pays smaller commissions.

The good news is that brokers are making money from the exchange. Whether that book of business is profitable, however, remains to be seen.

Brokers who sell an individual non-Medicaid health plan through Access Health earn $16 per enrollee per month in commission. Those who sell plans from the small business exchange, called SHOP, earn $40 per employee enrolled (not including dependents).

Approximately 90,000 residents are now enrolled in non-Medicaid individual exchange plans, Mele said. He estimated that 35 percent of those enrollees were assisted by brokers, meaning insurers in the exchange are currently paying about $500,000 a month in commissions. That number has grown over time with new enrollments.

The SHOP exchange had approximately 1,200 people enrolled in 174 groups as of January. It paid out about $110,000 in commissions in 2014, according to John Carbone, SHOP's sales manager.

Push for more business

To create more business opportunities state Rep. John F. Scott, a freshman Republican lawmaker from eastern Connecticut who owns the Bailey Agencies in Groton, is proposing legislation that would require a broker to be involved in the sale of all insurance plans sold through the exchange.

“I feel the state of Connecticut should not be in the business of competing with small businesses,” said Scott, who has sold upwards of 60 exchange plans. “I think it would be good for small business owners who own insurance agencies throughout the state.”

Scott said the change would be particularly useful as federal funds dwindle for Access Health and other state exchanges. So far, the federal government has funded most of the exchange's operations, but those dollars will eventually fade, forcing Access Health CT to become self-sufficient.

Already, the exchange has cut back on its enrollment marketing and operations push because of less funding. Who better to pick up that slack than brokers, Scott said.

“I have a small business that's capable of selling these products in my district I represent,” Scott said. “I think all of us would be more than willing to sell these products.”

Massa, the Newington broker, likes the idea of having more sales, but he worries there might not be enough health insurance brokers in the state to meet the demand that such a bill would create.

“I don't know if it's practical,” Massa said. “You look at all the people enrolling…the process takes a while. This isn't a five-minute sit down.”

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