An AgencyEquity.com Exclusive
With the election over, everyone knows that the Affordable Care Act is here to stay. Neither the president nor the Senate will repeal it anytime soon. We are now in the implementation stage. And that’s the hard part.
A big part of the ACA is the creation of online health insurance “exchanges” to help individuals and small businesses navigate the complex terrain of health insurance product design and eligibility. The law’s framers assumed that each state would set up its own exchange to serve its own populace. It would be able to carefully tailor their site and interface to reflect their own regulatory regime, carriers licensed in that particular state, and “bake in” their own state Medicaid eligibility rules into the system.
But the law doesn’t require it. States have the option to opt out of spending their own money to create the exchanges, and shift the burden right back to the federal government that conceived them.
As of this writing, some 20 states have told the feds “thanks, but no thanks.”
That leaves the Administration in a bind: Now that they have passed the law, they have to somehow make it work. They must now create, simultaneously, 20 separate state portals, each with a bewildering assortment of carriers, products, deductibles, state mandates, Medicaid eligibility rules, and marketing requirements. The law requires that all the exchanges be fully operational by 1 January 2014. But even that is too late. The real deadline is 1 October, when enrollments begin.
Kansas – where the Secretary of Health and Human Services Secretary Kathleen Sebelius once served as insurance commissioner and governor – received a $31 million dollar “early innovator grant” from the Federal government that would require them to set up an exchange. They sent it back.
So that leaves the Obama Administration and his Department of Health and Human Services to do it – and some people are wondering if they can pull it off. Indeed it is looking increasingly as if the Administration has painted itself into a corner.
It doesn’t look like they are going to make it.
The wound, for the federal government is self-inflicted: The Department of Health and Human Services has still not finalized the regulations that will be required to make the law work. This causes a project management bottleneck. Software designers cannot complete their packages until the regs are finalized. States cannot commit to a design. No one can get anything done until the DHHS does their part. Planners just received a setback in November, learning that the software backbone that will drive the implantation of health insurance exchanges will be delayed at least 90 days, as a result of the lack of clarity from DHHS. Which compresses the timeline even further.
Further, they have to do it with $1 billion. Experts are predicting substantial cost overruns – forcing the DHHS to cut services elsewhere, or perhaps force them to tack a surcharge onto exchange transactions.
We are looking at the possibility of a massive failure of execution on the part of the federal government, impacting 20 states and tens of millions of Americans.
Which leaves an opening for agencies.
The role of agents and brokers in the era of exchanges
Generally, the National Association of Health Underwriters foresees that agents will still have a role – largely in helping to walk individuals through the changing insurance landscape and assist them with determining their eligibility for tax credits. There will be other information resources available to consumers as well, such as a call center to supplement the online exchange, or “community navigators,” whose role is still unclear.
NAHU addresses the prospective role of the community navigator in a recent white paper entitled The Role of Health Insurance Agents, Brokers and Consultants in Any Health Insurance “Exchange”
“Many services provided by agents and brokers would never be able to be assumed by a navigator because they lack the expertise to perform those functions, so we question the wisdom of spending precious financial resources on a new system such as the navigators. If navigators should be subject to the same rigorous licensing and continuing education requirements that licensed agents and brokers are required to abide by.”
So it seems that the federal government will not be able to quickly ramp up a huge system of navigators to supplant the role of the agent. Neither navigators nor call centers will be able to pick up the slack. The problem consumers face will be more acute in states in which the online exchange system is hurried, not user-friendly or intuitive for the mass market, or otherwise flawed. In these instances, there will be tremendous demand for the services of a professional health insurance agent – and it is looking like the “opt-out” states will be leading the market.