Maggie's Farm

One of the premises of ObamaCare is that an excess of premiums is spent on items that aren’t strictly medical care delivery. So, ObamaCare imposed medical loss ratios on large health plans of 85% and on small plans and individuals of 80%. It would have been set higher, but as I wrote, the Congressional Democrats retreated 5% in the face of the Congressional Budget Office saying that 90% would equal outright nationalization and the CBO would have to add significantly to its calculation of, as forecast by critics and proven since, ObamaCare’s understated costs.

As with the cost forecasts of ObamaCare, the presumption that it will be simpler to deal directly with the government or its proxies is dubious, and the negative spillover effects have not been taken into account. The expertise and independence of the ObamaCare employees will be less than that of independent brokers. The complexity of figuring out the best alternative for buyers among competing plans will not be lessened, and ObamaCare employees should not be expected to provide that independence. The ObamaCare exchanges will vary across states, which will need the knowledge to create a medical insurance plan for small and large multistate employers.

A new start-up client of mine has four employees, in different states. The owner depends on me to figure that out, and as a condition of choosing me requires that I provide his regulatory and related counseling. If this start-up prospers, and it should, many more employees will be added. If its resources are stretched to dealing for itself with these matters, like other start-ups and small companies, the major source of new employment in the US, will have reduced prospects.

Under ObamaCare, agents expect their already reduced commissions to be considerably lowered, and will be less able to provide their services and stay in business. That will, also, affect the availability of agents to evaluate and implement plans for dental care, vision care, life and disability insurance, or the myriad of other benefits issues – like Cafeteria Plans – or related and tangential business and regulatory matters. Small firms particularly, but many large and giant firms, do not have the in house resources or expertise of their own to do so. This may lead to some agents – to stay in business – to overemphasize these other plans, not to the clients’ best interests.

Individuals purchasing health insurance will, similarly, have less access to independent agents to evaluate alternatives, or to rely upon for other health related matters, but most are expected to have no alternative than government plans or to be dumped on them by employers escaping the onerous regulatory burdens or increased costs of ObamaCare.

Health insurance brokers are, thus, on the firing line. The National Association of Insurance Commissioners from each state overwhelmingly just affirmed that the states’ exchanges under ObamaCare “"appropriately reflect the important role of insurance producers who are skilled, knowledgeable, educated and licensed and registered."

That is welcome, but doesn’t address the upcoming rulings as to how much so and how much they’ll be paid, which is the crux of the matter.

How health insurance agents are treated under ObamaCare will be a major leading indicator, a canary in the mine, of how ObamaCare will actually impact consumers.