The broker's tale: Louise Norris on skewed incentives in the ACA marketplace

Subscribe to xpostfactoid

As noted in last week's post, the ACA exchanges rely heavily on health insurance brokers and agents to help people sort their options and enroll in ACA-compliant individual market plans. Almost half of enrollments on the federal exchange, HealthCare.gov, which currently serves 33 states, are enrolled by brokers and agents. The same is true for Covered California, the largest state-based exchange -- which, unlike HealthCare.gov,* has maintained a consistent commitment to making the marketplace work as designed since its launch in fall 2013.

The reliance on brokers was inevitable, given the complexity of marketplace offerings (check out the 221 plans on sale in Miami, the nation's largest ACA marketplace, in 2022) and the pre-existing pool of expertise, commercially funded, that brokers constituted prior to ACA launch.  And while brokers have played a vital role,** the ACA failed to align their incentives in such a way as to ensure that their participation would be an unmixed blessing. Among the problems:

• Not all insurers that participate in the ACA exchanges pay commissions to brokers. Commissions have fluctuated quite a bit over the seven years of the marketplace's existence, as well as by state, region, and individual insurer.
  
  
• The lightly regulated market for so-called Short Term Limited Duration plans fostered by the Trump administration (which rendered them neither short-term nor of limited duration, if there's a difference) pays much higher commissions than the ACA-compliant market, but serves few enrollees' best interests. STLD plans are medically underwritten, riddled with exclusions and coverage gaps, prone to balance billing, and pay as little as half of premium revenue to cover enrollees' medical claims. ACA-compliant plans are required to maintain a minimum "medical loss ratio" (MLR) of 80% -- that is, pay out at least 80% of premium revenue in claims.

How do ethical brokers deal with these conditions, and how could incentives be better aligned? To address those questions I queried Louise Norris, co-owner with her husband Jay Norris of a health insurance brokerage serving individual market customers in Colorado.

Under Biden, HealthCare.gov maintains its Trump era tilt toward commercial insurance brokers

Subscribe to xpostfactoid

11/19: See update at bottom:  Healthcare.gov put out an email today that leads with nonprofit assisters

Obtaining health insurance from publicly supported programs in the U.S. is a complex process, necessarily supported by a variegated ecosystem of enrollment assisters.  For people under age 65, nearly 50,000 commercial health insurance brokers and agents are registered (as of 2020), along with about 30,000 nonprofit enrollment assisters (as of 2016), many of the latter supported by federal or state funding.

Enrollment of the under-65 population that lacks access to employer-sponsored insurance depends on both commercial and nonprofit assisters, who have different and to some extent complementary strengths and weaknesses.