An overwhelming majority of independent agents and brokers who sold individual health plans through state and federal exchanges this year believe it wasn’t worth the bother. According to
a new survey from consulting firm Oliver Wyman, just 19% of producers said it was “worth their time” to support individual exchange enrollment.
The primary reasons for Obamacare discontent seem to be the White House’s dismissal of the producer role, lack of commission payment by carriers and the size of the commission itself. In fact, 25% of producers told Oliver Wyman they expect commission to fall by 25% or more in the future.
“Considering the time and effort put into it, I would categorically say the exchange wasn’t worth it,” Dan Eich, president of Oak Insure in Olympia, Wash., told Insurance Business. “When 2015 comes around, I will likely make the decision not to participate, except with my existing clients.”
Eich said he has been snowed under since the exchange opened in October, working nights and weekends to service new individual applicants—all without pay from carriers.
“I haven’t been paid for any of these applications that have gone into the state system,” he said. “I’m certain the carriers will make payments eventually, but it’s just taking forever for all the files to be transported from the state.”
Eich’s situation is certainly not unique. In fact, almost half of producers told Oliver Wyman they expect to focus less on health insurance post-reform.
That’s an attitude Orange County, Calif. agency owner Patrick Freeman said he can understand.
“As a member of NAHU, I’ve seen what’s going on in other states and I can understand why agents are down on it,” said Freeman, who runs Freeman Insurance Agency in Laguna Beach. “We weren’t treated very well—a number of states have tried to eliminate brokers without a lot of success.”
Like Eich, Freeman has not received full commission payments from carriers on the exchange. He is confident he will receive payment eventually, but is unsure whether he will continue taking on new clients during the 2015 enrollment period. He plans to do a profit and loss statement on this year’s activity to “see if it makes sense.”
However, like other survey respondents, Freeman is wary of how it may affect other portions of his business—particularly if the open enrollment period coincides with that of Medicare.
“It’s absolutely insane. Putting these open enrollment periods of not of each other is total abuse of the system,” Freeman said. “Medicare is probably 60% to 70% of our business, and if the enrollment periods do coincide, our choice will be to take care of our Medicare clients and give minimal service to IFP clients.”
Eich also plans on moving forward in different pursuits.
“Small group is a large part of my business, so that’s where my concentration will be,” he said. “Individual is something I participate in because I have a fairly large book of business. As far as focusing in that area or trying to market that in the future, I don’t think that’s going to happen.”
Given the results of the Oliver Wyman survey, this will likely be true of most agents and brokers.
“And that won’t be good for the consumer,” warned Freeman.
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