UnitedHealth Group sent shockwaves through the insurance agent community this week, announcing it will no longer pay commission to agents who sell the insurer’s plans from HealthCare.gov or any of the state exchanges established by the Affordable Care Act.
The nation’s largest health insurer released a statement late last week saying it had made a “mistake” by choosing to expand so rapidly into exchange plans, which has caused major losses for the company and forced it to lower its 2015 earnings forecast. To slow the financial fallout, UnitedHealth is now ending agent commission on those plans.
“These adjustments are consistent with our long-stated approach to carefully evaluate and better understand the dynamics of exchanges as they have become clearer over time and adjust accordingly,” the insurer said in statement.
UnitedHealth had previously attempted to save money by reducing agent commissions from 10% to 2% – a reduction of 80% for the hundreds of insurance agents who sold the bulk of the carrier’s policies during the previous two years. The insurer has also removed quoting and enrollment functions for all marketplace plans through agent/broker portals.
The decision will take effect January 1 in the two dozen states where UnitedHealth sells ACA coverage.
Agents are expected to lose thousands of dollars a year as a result of the change, and many are now saying they will stop recommending the carrier’s plans to clients.
“While we want to provide the right solutions, I feel we’re losing a degree of objectivity,” said Rob Ferguson, an agent with Absolute Insurance Solutions in North Carolina. “It may be a less expensive plan – and that’s what you’re ultimately looking for – and as an agent, I’m going to make you aware of it, but I’m not going to facilitate that process through the marketplace because I’m really not getting paid for my time.”
The move is so unprecedented that Mark Hall, a law professor with Wake Forest University, believes it may foreshadow UnitedHealth’s eventual plans to exit the exchanges altogether.
“The only time I’ve seen this before is when insurers are required by government to sell a product they do not particularly want to sell,” Hall told North Carolina’s News Observer. “Here, this seems consistent with an insurer that no longer wants to sell through the exchanges…but is not allowed to withdraw immediately, so it’s pushing its commissions to zero until it’s allowed to exit.”
Many insurance agents have already seen their health insurance commissions slashed as a result of the ACA’s medical loss ratio provision and have diversified their offerings simply to replace lost revenue. Others have started charging a consultation fee directly to consumers.
But some, like Ferguson, have drawn a line.
“If you want to go with United, you can go on your own,” he said. “But you won’t have an agent to advocate for you.”
