Health Care: Reform or Retribution?

Regardless of size, employers in every market should keep their eye on the health care ball. The Patient Protection and Affordable Care Act of 2010 (HR 3590) and corresponding Health Care and Education Affordability Reconciliation Act of 2010 (HR 4872) are the new laws of the land.

Employers that sponsor an employee benefit health plan should reasonably expect the new law to produce many questions from their employees. With the recent prohibition of pre-existing condition limitations and the creation of the new individual mandate, an employer is sure to be approached by its employees about the real impact of health care reform.

Merriam-Webster defines "reform":

• 2 : to put an end to (an evil) by enforcing or introducing a better method or course of action

Taking the time to read the countless pages of legislative text and summaries offered by numerous organizations and special-interest groups across the nation, one could deduct that the most immediate effect of the act is to inflict punishment on the insurance industry for behaving "badly". Nearly all of the most pressing changes to the system are geared toward empowering the consumer. A list of commandments, if you will, was handed down from Congress and the Obama Administration to what legislators portrayed as villainous corporate behemoths that have misguided the industry for years.

All this and yet experts are saying that the health care bill will cost more than what they originally thought?

With all the potential for misdirection and contentious rhetoric on the issue, employers who wish to provide realistic expectations to their employees should be consulting with an independent insurance agent or benefits professional. Health insurance agents will definitely take on more of a consultative role in the post-health care reform era. The days of an agent simply showing up annually to buy lunch and deliver a renewal increase are over. Health insurance agents have gradually become a vital resource to employers of all sizes and could potentially grow to be permanent extensions of the traditional Human Resources Department.

Just ask Carol Santangelo, Controller at Integrated Solutions Group. In 2005, her company switched to a local insurance carrier. The policy was sold direct by the insurance company with no agent representation. Over the course of the next few years, the only options she was presented with at renewal time were offers from the current carrier. In 2008, she decided to hire an independent insurance agent to represent her group. "I just felt uncomfortable with our employees dealing directly with the insurance company all the time" said Santangelo, "I wanted to know that our staff had an advocate on their side if an issue came up with their benefits."

Carol is not alone. "I wouldn’t know where to begin to take time out of my day to assimilate the lengthy regulatory guidance that we have to deal with. COBRA, ERISA, HSA’s, HRA’s, etc. I have to count on my agent. I don’t feel comfortable going elsewhere" says Cheri Esmond, franchise owner of several Perkins Family Restaurants.

"Health insurance is such a personal thing" continued Esmond, "Dealing with doctors offices, prescriptions and benefits for my employees and their families...we don’t have a Personal Issues Department. Being a business owner is already a full-time job. Having an independent insurance agent to help guide our employees through those tough times is key to the benefits package we offer."

All the while, there are provisions within the new law that pose a threat to the career of the health insurance agent. The new law requires health insurance companies to adhere to federal minimum medical loss ratio (MLR) requirements for both the large and small group markets. It requires an 85 percent MLR in the large group market and an 80 percent MLR in the small group market. The National Association of Insurance Commissioners (NAIC) has been tasked with the job to establish uniform definitions of activities and standard methodologies for calculating MLRs. The question remains, while the feds and the insurance companies continue to battle for a favorable public opinion, will health insurance agents survive the MLR cuts, or will they be invited to apply for jobs with the federal government’s new insurance exchange?

That question, like so many other questions about the new law, remains a mystery. Only time will tell, and the clock is ticking.