After more than a year of debate, Washington, D.C., has put its punctuation mark on federal health reform, but for many agents’ groups, it appears to be less of a period and more of a question mark.

John T. Scott

John T. Scott, president of the Virginia Association of Health Underwriters, told IFAwebnews.com the group, like many other agents’ organizations, is still interpreting the sweeping changes of the Patient Protection and Affordable Care Act.  With provisions including the creation of health insurance exchanges and an individual mandate, how the legislation takes shape is still a work in progress, he said.

“I wouldn’t say we are at a panic stage, but there is certainly a fear of the unknown,” Scott said. “Any time you see legislation that, to agents, is sweeping legislation, there are a lot of questions. There is a fear of what is coming down and an uncertainty of what the rules will be.”

One immediate provision of the new law requires health plans to report medical loss ratio (MLR), the amount of premium dollars spent on treatment versus administrative costs, including agent commissions in most cases. Plans spending less than 85% on actual health care services for large group plans and less than 80% for individual and small group plans must provide rebates to consumers as of Jan. 1, 2011.

Scott said while “that may be fair to the large group market,” the new requirement “is a significant challenge” to the small group and individual markets.

“For agents, those ‘administrative costs’ include commissions, so now, the market could be in for an upheaval,” he said. “It’s a lot, especially for the mom and pop operations versus the larger agencies. And on top of that, there is the economy, so it is a challenge to find something else [in terms of employment] out there.”

‘Uncertainty and confusion’

Janet Trautwein, executive vice president and CEO of the National Association of Health Underwriters, echoed Scott’s sentiments at a recent panel discussion in Maryland.

“We need everybody to not panic and to stay engaged in the process,” she said, adding that agents may be “very surprised at how much the law can change as regulations to support it are drafted.”

John Prible

At the Independent Insurance Agents & Brokers of America (Big I), John Prible, the group’s vice president of federal government relations said the office is “being bombarded with questions from our membership.

“Panic is not the right word here,” he told IFAwebnews.com. “I think it is more accurate to say that there is uncertainty and confusion. The law has passed and there are a lot of question marks on what will happen in the implementation.”

Prible added that while 14% of Big I membership has health insurance in their book of business, “it is likely taking up 90% of their time right now trying to figure things out.”

With challenge comes opportunity

One such set of inquiries, Prible said, is the role of the agent in health insurance exchanges, state-based marketplaces for small employers and individuals to shop for coverage beginning in 2014.

“We are telling our members that [exchange customers] need to sign up for one of potentially five health plans and will need to know what works best for them,” he said. “They will need someone to talk to and the agent is that person.”

Scott said while reform has many unanswered questions at this point, it could also bear significant opportunities unrecognized at this point.

The key, he added, is education – through associations like VAHU and to clients searching for the same answers as agents and brokers.

“People are looking for answers and we will try to keep them as informed as we can, especially in the next one to two years,” Scott said. “We need to build confidence that this is not the end of the world.”

Scott said associations like VAHU and NAHU are especially important to be part of during times like these to increase awareness of both state and national issues.

“Agents can get education from their carriers, but the carriers are more focused on what this [reform] means to them,” he said. “If there ever was a time to be involved with your association, now is that time.”

This story originally appeared in the May 2010 print edition of Insurance & Financial Advisor.