Where in the News is CSAHU?

Posted: February 28, 2018

 A few CSAHU board members met with Ed Sealover at The Denver Business Journal in January.  The result was the article below.  As a team, we can make a difference.  If you are part of CSAHU thank you.  If not, please check our website at www.csahu.org to see what benefits come from being a member of an association working on your behalf.  Don’t let others mold your business for you. 

Insurance brokers respond as Colorado health-plan companies slash commissions: Feb 15, 2018, 3:36pm MST Updated: Feb 15, 2018, 3:46pm MST

 Colorado health insurers are reducing or eliminating the commissions they pay to brokers who send individual customers their way. The move forces brokers to stop taking new individual clients and to seek from the Colorado Legislature the ability to charge fees on policy-sales referrals.

The changes, which began a couple of years ago but resulted in Kaiser Permanente Colorado becoming the first insurer to stop paying any commissions for new individual enrollments just this year, are the result of the macroeconomic shift toward more direct consumer sales that has led to trends like fewer people using travel agents and more people choosing to sell their homes without a real estate agent.

But the insurance industry specifically has been looking for ways to cut out costs like commissions as policy premiums continue to rise and both individuals and employers clamor for relief. Traditionally, insurers have paid brokers' commissions in the range of $150 to $200 per individual policy per year or $25 per person per month who is covered through a small- or large-group plan, said Joni Reents, owner of the Reents Insurance Agency in Broomfield.

But starting in 2016, some insurers began paying tiered rates based upon the number of individuals brought to them, and others just cut reimbursements drastically on individual plans, she said. Anthem Blue Cross and Blue Shield of Colorado, for example, went to a tiered-reimbursement system last year, Reents said.

Cigna cut commissions back to $5 or $15 a person. And Kaiser this year eliminated commissions on all new individual policies and agreed to pay $75 per person only when brokers brought to them at least 200 renewals at one time. As a result, some brokers are leaving the sector altogether, said Tim Hebert, owner of Sage Benefit Advisors of Fort Collins.

His firm has reached out to other agents and offered to take over the business of people looking to move to a new profession, and he’s ended up taking that book of clients from one firm a month since September, he said.

Jacquie Healy, CEO/president of Trilogy Benefits of Aurora and president of the Colorado State Association of Health Underwriters, said the loss of brokers will hit individual clients with special needs very hard. In addition to selling policies to those clients, brokers do things like cross-check which policies cover specific doctors and specific medications, and they work with clients to resolve payment issues that come up throughout the year.

“The consumer is hurt because they do not have full representation of the plans and their options,” Hebert said. “And the carriers are hurt because they have consumers with less education who do things like using the emergency room when they can’t get an appointment with a doctor.”

Spokesmen for both Anthem and Cigna declined to comment on why they have changed their commission structures. A statement provided by Kaiser to the Denver Business Journal, however, said that its decision to rely on online and internal systems for enrollment in individual plans is part of its work to provide more affordable care to members.

Other insurance-industry leaders have estimated that companies can cut between 1.5 and 5 percent off the costs of individual plans if they don’t have to factor in the cost of commissions.

“Like many other health plans, our enrollment in individual and family plans has fluctuated quite a bit for the past few years, and we don’t know what, if any, impact this change had on plan enrollment this year,” the Kaiser statement continued. “In the coming months, we’ll revisit this plan to determine if we’ll make any changes moving forward.”

In the meantime, brokers are pushing a bill in the Legislature that would allow them to charge clients a fee if they do not receive commissions on those plans from insurers and if they disclose the fee to the clients. Senate Bill 136, sponsored by Sen. Tim Neville, R-Littleton, is needed because current law does not allow brokers to charge fees to individual clients.

The bill received unanimous approval Tuesday in its first hearing before the Senate Finance Committee, with brokers supporting it and the Colorado Association of Health Plans coming out as neutral on the measure.

Neville fielded questions about whether the new fees could exacerbate the constantly increasing cost of health care, but he responded that uninformed consumers would do more to drive up their own expenses than such fees would.

“I think one of the ways you don’t eliminate unnecessary costs in the system is by eliminating paying people for the work they do,” Neville said. “I would argue that would do just the opposite. It limits the information that is available to the consumer, which is key when you are trying to drive down costs.”

Ed Sealover Reporter Denver Business Journal