Friday, July 2, 2010

Reform: Death Knell of Independent Health Agents?

Here’s how the Congressional Budget Office (CBO) puts it:

“In general, however, substantial reductions in administrative costs would probably require the role of insurance agents and brokers in marketing and selling policies to be sharply curtailed and the services they provide to be rendered unnecessary.”

Small wonder then, that health agents across the U.S. distrust, even detest, Obamacare.

Selling health policies to individuals and businesses is their livelihood. The threat to wipe them out is not theoretical. The CBO has explicitly expressed Obamacare’s intent.

To be told the government can do a better job lowering administrative costs, through health exchanges, organized and conducted by balky state and federal bureaucracies, galls agents.

Why not, say many agents, simply make health insurance premiums for individuals and small groups deductible, as they are for large employers? And why not, encourage Health Savings Accounts, which now have 10 million holders, grew 25% last year, and are proven to lower costs?

But no, says government. We will “exchange” government-run exchanges for flesh-and- blood agents, and we will eliminate the advantages of HSAs by imposing out-of-pocket limits on how much consumers can spend on health deductibles and personal care.

What follows are results of a survey of 660 professional insurance agents across the U.S. designed to test their attitudes towards the new health law.

• Health insurances as a percent of total business, 75%

• Small groups as source of most income, 52%

• Individuals as source of most income, 26%

• In business more than 10 years, 79%

• Continue with present business model, 32%

• New law will eventually eliminate agents, 59%

• Repeal law with replacement of new law, 63%

• Elect new members of Congress, 59%

• Must be paid at least 80% of current fees, 77%

• Ombudsman as threat to agents, 76%

• Navigators demean value of agents, 70%

• Party affiliation, GOP, 45%

• Party affiliation, Independent, 40%

Who will replace agents? Presumably state and federal bureaucrats.

And will these agents of government reduce administrative costs through comparing costs and consolidating individuals and small companies into larger entities?

Given government’s miserable track record of reducing administrative costs, erecting giant bureaucracies, imposing costly regulations as far as the eye can see, and ignoring practical private solutions, I, along with health agents, are dubious.

Source: Greg Datillo and David Racer, “National Survey Reveals Agents See A Gray Future,” For further information email, or call 651-340-1911, or vist heep://www.freemarkethealthcare. com.


Kevin said...

When every study shows that consumers must have "skin in the game" in the form of deductibles, the government tries to kill HSA's in the house version of HCR and now trying to limit deductibles. I have little hope costs can be controlled when trying to give it away free. As the Happy Hospitalist says FREE=MORE. More unnessisary tests, more costs. Guaranteed. Way to go.

Richard L. Reece, MD said...

Kevin; Right on. As long as consumers perceive health care to be free, costs will not be controlled."Free" care is the road to national bankruptcy. There is no free lunch, even in health care.

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