“The small group market is dead, and so is the broker.”
That is what one health insurance broker told me during a recent event where the Maryland and Washington, D.C., health insurance exchanges were outlined for a gathering of insurance professionals.
In Maryland and D.C., at least, that broker’s prediction of doom-and-gloom might come true.
By decree of an unelected board appointed to implement the District’s online health insurance exchange that is required under Obamacare, health insurance agents and brokers that serve the small group market might be shut out of Washington, D.C.
The D.C. Health Benefits Exchange Board voted to exclude brokers from the health insurance equation, forcing all small employers with 50 or fewer workers to buy health insurance for their workers online through the D.C. health insurance exchange. Individuals who call the District home would also be denied the right to purchase insurance through a broker. Larger employers would eventually be moved over to the exchange as laws are further implemented.
In addition, Maryland and Virginia residents who happen to work in the District would also be required to carry health insurance purchased by their employer through the government-run online insurance marketplace.
If, after the District lawyers give it their blessing to the proposal, and if the issue of whether the proposal needs City Council approval passes muster (yet to be determined if it is even required), brokers will be out of luck.
It would not be, “maybe.”
Not, “It depends on how you look at it.”
And certainly not, “Well, in spite of President Obama’s health care reform, there is still opportunity for brokers.”
In this case, brokers will be shown the door and kicked to the curb.
Hannah Turner, the legislative chairperson for the Greater Washington Association of Health Underwriters, was a little more diplomatic when describing to me the potential fate of small group health insurance brokers.
“There is a high probability that brokers and agents would be cut out as an additional cost center,” Turner told me when we recently discussed the proposal.
She noted some contradictions in what the board is proposing and the up-and-coming exchange.
“The District has said agents and brokers would have a role for small business” in the exchange, she said, adding that navigators would primarily serve individual markets.
“However, navigators would be able to work with small employers as well,” she added.
Navigators are not licensed brokers and basically would only need a permit, much like a lunch cart vendor.
And if brokers and agents decided to sell through the exchange and not in the private market (by law, they would not be allowed to do both), there is no certainty as to their compensation; would they earn commissions comparable to their value to the equation given their licensing, professionalism and hours or years of mandated continuing education, or find themselves being paid like the hot dog cart worker?
There is little that agents and brokers can do that hasn’t already been attempted: Lobbying, gathering petitions and bringing business owners before the D.C. Health Benefit Exchange Board, seeking a reprieve from the draconian move.
For health insurance brokers who serve the average small business in Washington, D.C., it means that they might be forced to close up shop, in the same manner that government shuts down porn shops, strip clubs and “head” shops that sell drug paraphernalia.
Health insurance agents and brokers who service small businesses have been deemed persona non grata in Washington, D.C., just like those illicit businesses.
And, even if Obamacare – innocuously referred to as the Patient Protection and Affordable Care Act (PPACA) – is somehow overturned or denied funding should Mitt Romney be elected president, the D.C. health insurance exchange and the exclusion of agents and brokers will remain the law. The board has seen to that.
While a somewhat different scenario, the results could, conceivably in time, be the same in Maryland.
Officials recently announced that another $123 million in taxpayer money has been given to the state to continue developing the Maryland Health Connection. And, like D.C., even if Obamacare is overturned, those same officials promise that the exchange will move forward.
And the Maryland officials are running around the state telling everyone — including rooms full of disbelieving agents and brokers — just how great the exchange will be.
For a year or more, I have read and heard from some brokers and agents who say that smart professionals will find a way to deal with Obamacare and the impending exchanges.
In many cases, that might be true. But when a government – by mandate – makes it illegal to purchase health insurance through an agent or broker licensed by that same government, any assumptions about opportunity in the face of restrictions meted out by that government are rendered moot.
If Washington, D.C., is any indication of what a jurisdiction or state can do when the law is taken to the extreme, then those with a Pollyanna-like outlook on the future of the health insurance broker need a serious reality check.
That’s my take.