How Agents May Fare in a New Healthcare Landscape
by Leila Morris
Many hands went up as Warner Pa-cific co-CEO, John Nelson, asked agents if they were worried about how California healthcare reform would affect them. Warner Pacific held its recent sales expo in Woodland Hills, California in addition to several other locations throughout the state.
“How will state regulations affect the market? You will have a role. We will have jobs decades into the future,” he assured agents. Nelson is optimistic because of the role of competition, the role of consumerism, and the role of agents having control over their own destiny. The public expects choice, especially in doctors and hospitals. Choice leads to lower prices, lower rates, and better benefits. Canada may have universal healthcare, but it does not have universal access to healthcare because of long waits for treatment, he stressed.
Over-regulation has backfired on other states. Washington State mandated guarantee issue to individuals, but without a mandate to get coverage. As a result, carriers withdrew from the market. “You couldn’t buy coverage,” he said. The regulations were finally overturned.
Will insurance companies get rid of agents? It’s not likely. The agent distribution force is the most effective and economical way to distribute coverage. “Companies don’t want to hire full time employees to do what you do…They pay you a competitive rate to get your time and attention. One large company rep told me that his company spends $600 million in agent commissions, but that supports an $11 billion block of business,” said Nelson. The executive isn’t worried about paying the commissions. “He’s worried about how old you’re getting. Fifty-seven is the average age of an agent. Agents are getting in the comfort zone and are not growing their practice.” Another president of a large insurance company told Nelson that he is worried about who will be replacing agents who retire in five to 10 years. “If they are worried about your future, that’s worth knowing.”
With consumerism, you can’t have unsustainable rate increases. Employers are reducing benefit levels. The risk is shifted to employers with higher deductibles and co-pays. When 36 million Californians are asking, “How much does it cost,” they will soon be asking why it costs so much. That will drive provider behavior. “What we are selling is financing of America’s healthcare. We have great benefits to recruit and retain great employees. It’s even more important than salary,” he said.
Consumers will figure this out. Americans are used to shopping for cost and quality. Consumers are already using Websites to compare costs of drugs in different pharmacies. Consumers will be the saviors of our business,” he said.
He cautioned agents, that with so much attention on the healthcare industry, they will be highly visible and their actions will be under a microscope. Any time an agent does not work with integrity, it reflects on the whole industry. “They are looking for bad examples. When you reach out and volunteer, let them know you are an agent. It will reflect well on everyone,” Nelson said.
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Leila Morris is the editor of California Broker Magazine.
Email: edit@calbrokermag.com
www.calbrokermag.com
