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There are a lot of stakeholders in the health care reform debate. Patients. Doctors, hospitals and other providers. Insurers. Employers. And  so on. One often overlooked group with a great deal at stake in the current reform effort are health insurance brokers, especially those whose practices focus in the individual and small employer market segments. Today they provide some of the services expected of an exchange, helping to translate benefit plans into understandable options. Professional brokers go further, helping health care coverage shoppers find the plans that best fit their unique needs and then assisting them in gaining the benefits they’ve paid for.

The bad news is the media all but ignores the role of agents in the system. They focus on how confusing health care coverage can be (and it certainly can be opaque) and how consumers are at a disadvantage when dealing with their insurers (and they are) without once mentioning the counselors and advocates available to them: professional brokers.

The good news is that lawmakers involved in drafting health care reform legislation are aware of brokers and what we do. They’ve sought out the National Association of Health Underwriters (the primary professional organization representing health insurance brokers) for testimony and input.

A seat at the table is great, but eventually brokers needs to justify their value to the system to those who live and work beyond the Beltway. If the media and public are unaware of what brokers do lawmakers can ignore agents with impunity. Which is why NAHU is launching a grassroots campaign to educate decision makers and opinion leaders to show why brokers “can’t be replaced by a government-run call center.”  Core to this intitiative is a white paper focused on the value of licensed producers. Titled “Americans Deserve Access to Professionally Licensed and Trained Health Insurance Agents, Brokers and Consultants,” the report describes the various services producers provide to consumers and how they compare to alternatives such as government call centers.

The challenge facing brokers is that we are, at the end of the day, overhead. We don’t heal the sick. We don’t deliver medication. But that doesn’t mean professional producers aren’t valuable. Whether health care in America is managed by private enterprises or government agencies, there’s more to health care than stethoscopes and MRIs.

The NAHU white paper does an excellent job of laying out the important role producers play in helping Americans get the most out of their health care coverage. For instance, it cites a study by the Center for Studying Health System Change that noted “In contrast to the notion that brokers merely make insurance more costly, these findings suggest brokers can provide important benefits to small employers, plans and policy makers.”

This sentiment is echoed by the Congressional Budget Office, cited in the NAHU report, which concluded that, especially in the individual and small group market segments, producers “handle the responsibilities that larger firms generally delegate to their human resources departments — such as finding plans and negotiating premiums, providing information about the selected plans, and processing enrollees.” In fact, the CBO recommends that “because many small firms and individuals may find brokers’ services valuable, policymakers might consider allowing such services to be used in conjunction with [a buy-in option to FEHBP].”

Too often those policymakers look at health care too narrowly. The technology sector shows how misguided this can be. In his book Marketing High Technology, venture capitalist William Davidow describes the difference between a “device” and a “product.”  A device, in an IT context, is a piece of code or some hardware. It’s what is invented in the laboratory. Products, however, goes beyond that. “A product is the totality of what a customer buys,” writes Mr. Davidow. “It is the … service from which the customer gets direct utility plus a number of other factors, services , or perceptions, which makes the product useful …” (emphasis added).

Medical care is obviously the core service (the equivalent of the “device”) when it comes to health care. Staying healthy or getting well is the ultimate goal. But the health care system is about far more than what happens in the doctors office or a hospital. It’s the development of new medications and devices, it’s healthy living education, and it’s the expertise provided by professional health insurance agents, brokers and consultants.

Health care reform is coming. That’s a good thing. In shaping what that reform accomplishes, lawmakers would do well to look at the system holistically — as a product, not just a device. That includes, as the NAHU white paper shows, acknowledging and preserving the value brokers provide to their clients.

Posted in Health Care Reform, Healthcare Reform, Insurance Agents, Politics Tagged: health insurance brokers

If Congress is to enact comprehensive health care reform on anything approaching a bi-partisan basis, Democrats are either going to have to jettison their calls for creating a public health care plan to compete with private insurers or fashion a compromise that makes such a government-run plan acceptable. This won’t be easy.

Last week, 17 Senators  signed a letter to Senate Finance Committee Chair Max Baucus and Health, Education, Labor and Pensions Committee Chair Edward Kennedy insisting that a public health plan needed to be a part of any health care reform package.  The 16 Democrats and one independent argued that “There is no reason to believe that private insurers alone will meet the public purpose of ensuring coverage for all Americans at affordable prices for taxpayers.” According to The Hill, the originator of the letter, Senator Sherrod Brown, told reporters that “A public plan option ‘would provide competition to the sometimes dysfunctional private insurance market.’”

Seventeen Senators is a significant block of votes, especially when they’re expressing the position of the Obama Administration as well. Yet Republicans are, thus far, united in their opposition to a government-run plan.  And not all Democrats are sold on the idea, either. The New York Times counts Democratic Senators Ben Nelson and Arlen Specter as among those expressing “reservations about a public plan.” If these and other moderate Senators object to the public plan, their liberal colleagues will be faced with the need to either give in on the issue or give up on comprehensive health care reform.

Thus the search for common ground.

The New York Times reports Senator Charles Schumer is attempting to do just that. The article  is indispensible reading as Senator Schumer’s was asked to search for a compromise by Finance Chair Baucus. Senator Schumer identified four principles that might make a public health insurance plan acceptable to moderates:

• “The public plan must be self-sustaining. It should pay claims with money raised from premiums and co-payments. It should not receive tax revenue or appropriations from the government.
• “The public plan should pay doctors and hospitals more than what Medicare pays. Medicare rates, set by law and regulation, are often lower than what private insurers pay.
• “The government should not compel doctors and hospitals to participate in a public plan just because they participate in Medicare.
• “To prevent the government from serving as both “player and umpire,” the officials who manage a public plan should be different from those who regulate the insurance market.”

This approach was echoed, with less specificity, during testimony before the House Ways and Means Committee by the new Secretary of Health and Human Services, Kathleen Sabelius. According to The Wall Street Journal, she told a Congressional  Committee, “What I can assure is that it can be done as a level playing field.” The key, she went on to say, is how the program is set up. “It is about the rules that are established at the beginning.”

But there’s the rub. The rules in the beginning are not necessarily those that apply long term. California had a government managed health plan competing with private carriers in the small group market not all that long ago. The Health Insurance Plan of California (HIPC) was created by AB 1672 as part of a comprehensive small group health care reform package. The HIPC operated under many of the prinicples put forward by Senator Schumer. Ultimately the HIPC, which was spun off from the government and became the PacAdvantage, failed.

Yet almost immediately after it’s creation, legislators from both sides of the aisle put forward proposals to buttress the plan by giving it special status. Government, regardless of the party in charge, when seeking to build new programs, tends to look to existing programs as a foundation. Which means the level playing field promised by Secretary Sabelius may not last long. The principles enunciated by Senator Schumer may not last. As with any public program, once a government run health plan is in place, the rules that apply can be changed at any time. And someone is likely to try.

This doesn’t mean the search for a compromise shouldn’t continue, but  it highlights the difficulty involved. Unless the restrictions on the public plan aimed at preventing it from gaining an unfair advantage in the market are strong and long lasting, any compromise will simply be a milestone on an inevitable journey.

Posted in Barack Obama, Health Care Reform, Healthcare Reform Tagged: AB 1672, California HIPC, charles schumer, government health plan, Health Insurance Plan of California, kathleen Sabelius, PacAdvantage