The predicted demise of health insurance brokers may have been premature. Industry veterans and entrepreneurs are carving out niches and expanding their roles in the new market.
In these times of stagnant employer based insurance market and ever-increasing digital commerce, it is fair to wonder whether there is natural consumer demand for the services of insurance agents and brokers.
A 2013 Aflak poll suggested that many insurance brokers were worried about being irrelevant. About 45 percent of the 300 brokers polled were considering leaving the health insurance business entirely; half said they were only "somewhat confident" about their firm and industry's future.
Who needs help finding and shopping for a health plan, or any other kind of insurance, if they have internet access and basic financial literacy? There is Amazon, Expedia, Travelocity, iTunes, eHealthInsurance, online banking and online marketplaces for subsidized health insurance. Also, does American healthcare really need another middleman?
Well, some brokers using a mix of old and new are finding hustling and bustling business in the growing direct-to-consumer individual market.
Among the brokerages serving this new individual insurance space is HealthMarkets, a Texas-based outfit selling subsidized and private plans nationwide online and in-person. Ken Fasola, a former Humana and UnitedHealth Group executive, is CEO and founded the broker and exchange company in 2010, anticipating a market migration to individually-purchased insurance.
As the national pool of Americans covered in employer-sponsored insurance shrinks a little bit every year -- now less than 78 million -- more and more middle and lower-income individuals are buying their own insurance and more Baby Boomers and seniors are buying Medicare Advantage plans.
Back in the 1980s and 1990s, "People thought it was the bottom end of the food chain. Now it's the other end of the food chain," Fasola said of the individual market, broadly defined from ACA plans, off-exchange plans, Medicare Advantage to supplemental products.
Like the retail exchanges eHealthInsurance.com, GoHealthInsurance.com and GetInsured.com, HealthMarkets is certified as a "web-based entity" by the federal government and can sell subsidized health plans available in the 36 states using the federal exchange.
Including those served by the federal exchange, Health Markets has agents selling ACA plans in 42 states, said Fasola.
Towards the end of the ACA open enrollment, 80 percent of HealthMarkets' volume is from consumers buying exchange plans -- although that's not all they're buying.
Fasola boasts of HealthMarkets selling the average customer three kinds of policies, including health, life, disability, vision, dental or critical illness plans.
The brokerage's main customer segment is "middle income Americans," who probably have high deductible health plans, might be a decade out from retirement or have chronic health issues. They can be well-served by "income protection products," Fasola said. Among those are critical illness policies, paying cash benefits upon diagnosis of something like cancer or stroke. Sensing the opportunity, Cigna, Unum and others have rolled out new product designs for critical illness plans and sales are expected to increase.
Even Walmart sees opportunties in insurance brokering. The retail giant is partnering with DirectHealth.com, a broker owned by the company Tranzact, to host insurance enrollment, education and sales sites at more than half of its stores -- in an effort to "bring transparency and simplicity to the changing health insurance market."
Better than navigators, good for exchanges
Healthcare.gov and state exchanges are working much better and faster for everyone involved this year, Fasola said. But he also likes to note the knowledge and service that HealthMarkets and other licensed brokers can offer consumers who want to, say, find a plan with a certain doctor or drug -- and compare that to the official navigators and assisters.
"We see people who start and go the whole way through with us, and people who got frustrated own their own or with navigators," he said. As USA Today lamented: "You can call HealthCare.gov three different times and get three different answers."
The navigators also seem to push the lowest price plans, Fasola said. HealthMarket clients who consulted a broker, found a plan they liked and then called back to Healthcare.gov haven been asked, "Did your broker tell you there was a lower-priced plan?"
"In contrast with ACA navigators, which the administration thought would replace us, price isn't the main interest," he said of consumers seeking the advice of a broker.
Brokers with HealthMarkets will ask consumers: "Are you concerned about prior authorizations? Do you have kids away at college?" Fasola said. "Our volumes and our competitors' volumes suggest that's valuable to consumers and the exchanges, especially with funding on the decline."
Fasola is bullish on his company's prospects in part because he's skeptical that everyone wants to use digital retail for products like life and health insurance. Even though many Baby Boomers have smartphones and seniors do internet research, they may still want to buy the product in person after additional help. "This is not like Amazon. It's still very complex."
Also, whether or not consumers are using a brokerage or an online exchange, there is the idea that too much choice can be overwhelming -- like 30 different health plans from five insurers across benefit tiers. "I worry about an individual agent who can sell 20 different companies," Fasola said. "Organizing around market leaders has served us well," he said, mentioning UnitedHealthcare, Aetna and others.