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PPACA – The End of the Health Insurance Broker in America? Hardly

July 23, 2011

The following is a response I posted to a broker who wrote this blog post and started a LinkedIn discussion on this topic:

“When the Hunter is killed by the Hunted: The End of the Health Insurance Broker in America”

 “The Patient Protection and Affordable Care Act has made a determination of our worth, and destroyed our profession as a result….Many of you may be confused, or misinformed, about the extent to which this legislation has relegated us to the level of a customer service representative, or the Barista at Starbucks, but rest assured: it has.

This is the most depressing and self defeating article I have read on this topic and I think your myopia and negativity blinds you to the opportunities that are there for quality intermediaries. And no Troy PPACA was not created to destroy your profession or worth.

“Obamacare only exists through misinformation …America is depending on your expertise, and our fate as health insurance brokers is now intertwined with the fate of our nation. We all lose our shirts if Obamacare is allowed to stand…all of us.”

Why you are quoting the discredited McKinsey study and any of Galen’s propaganda is beyond me. Taking Galen’s propaganda as gospel is enough to make anyone want to slit their wrists and get in a hot tub but thankfully it is factual swiss cheese

Here is a complete debunking of McKinsey’s study or at least a much broader set of views:

“If our customers followed our honest advise, they would all join the exchanges..”

This statement is utter nonsense and reflects to me a real lack of understanding your clients, their businesses, their employees and why benefits are provided in the first place.

  • Should some join?  Of course.
  • All?  Not likely.
  • How about the 40 million new customers created by the law. Will they need professional help assessing their options? Yes.
  • Will you get commissions for this work? Not always. States will have a say in this long term and HHS is reviewing options here now.
  • Will you need to charge fees? Yes sometimes. That is financial planners and others do today.

Let me ask you one simple question. If all employers wanted to do was drastically lower their medical insurance costs why haven’t every employer in the nation gone to a $5000 or $10,000 deductible/HSA?

Frankly the best advice you could give them is to go this route in many circumstances. Have you? Why not?

There is much more to a discussion with an employer than a back of the napkin calculation comparing dropping coverage and paying a fine and for employers <50 there are no requirements or fines for them only positives when the exchanges get going.

If an employer calculates the total cost of dropping coverage, increasing salaries, grossing up salaries to cover the increased tax and FICA burden for the employee and pay the penalty the cost difference is not going tp be much and anything short of this is simply going to demoralize employees and make recruiting and retaining talent harder, which is what drives any business.

If you cannot be perceived by a client as a true trusted advisor in their business like a lawyer or accountant and prove your value so you can generate fees in lieu of commissions it really is time to find a new line of work.

No industry in this nation has stood still and our has been glacial in terms of change until now. No one ever said any of us were owed a living and that things would never change.

You do realize that carriers will still offer plans outside the exchanges? That similar plans must have similar rates? That carriers do NOT want everyone that they insure today to go to the exchanges? That they will likely have unique options outside the exchange to entice businesses and will still pay commissions there?

I work and talk with benefits brokers everyday all over the country and do not hear this type of negativity. Most of my clients have hired in the last year not shrunk and are not worried at all that their clients are going to drop coverage.

My personal suggestion is that you get better educated about PPACA and focus on becoming trusted advisor to your clients vs. a one trick pony health insurance agent.

With change comes opportunity and the exchanges and law’s changes coming their will increased confusion and complexity that require real expertise.

You have the opportunity to a major part of the solution for clients vs. frankly part of the problem repeating misinformation about the law and sounding like Eeyore about your future.

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