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by Leila Morris
• Health Agents Give Their Take on the Market
• Nonprofit Clinics Face Increased Pressure Under Health Reform
• Healthcare Finance Execs Are Focusing on ACOs
• Insurers Now Must Cover Contraception Without Copays
• Younger Consumers Are More Likely to Buy Life Insurance From Banks
• Californians Begin Getting Rebates
• Critical Illness Guides
• Disability Leave Software
• Voluntary Accident and Cancer Insurance Products
• Fixed Index Universal Life
• Medicare Advantage
Health Agents Give Their Take on the Market
A Kaiser Family Foundation survey sheds light on how health insurance agents view the individual and small group markets and how they view changes under the Accountable Care Act (ACA). Agents say that health insurance deductibles are higher than two years ago. And they still expect large premium increases. Agents say that their clients are focusing on lower premium costs and higher cost-sharing, which is often at the expense of financial protection.
The Affordable Care Act is likely to lead to significant changes for insurance agents because it creates incentives for insurers to limit administrative expenses. It also provides for more standardization of health plans, which may change how much insurers and consumers rely on agents. Agents are eligible to take on the role of navigators in the exchanges. But, few are familiar with this program and it remains to be seen whether agents will be interested in taking on this role.
Clients Struggle to Adjust to Rising Costs
Sixty-two percent of agents say that the priorities of their small group clients have changed and 47%t say that the priorities of their individual clients have changed. Agents say that clients are more interested in the following:
• 42% lower premiums and higher deductibles or out-of-pocket costs.
• 13% coverage of specific benefits.
• 8% cost- sharing.
• 7% HSA-eligible plans.
Only 8% are less interested in the quality of benefits.
Forty-nine percent of agents say small group clients are putting more emphasis on low premiums while 36% say individual clients are putting more of an emphasis on low premiums. Seventy-two percent say that most clients underestimate what health benefits will cost.
Fewer Carriers Are in the Market
Forty-five percent of agents say fewer carriers are selling insurance in their area compared to two years ago. Consolidation varies by region with half of agents in the Midwest and South saying there are fewer carriers, compared to 34% of agents in the West.
Coverage Options Change
Forty-four percent of agents say that carriers are offering the same number of coverage options compared to two years ago; 29% say carriers are offering fewer coverage options; and 26% say carriers are offering more coverage options.
Seventy-two percent of agents arrange coverage with more than one insurer. Thirty-five percent say that most of their clients apply to two or more insurers, including 16% who say most clients apply to three or more. Applying to at least three insurers is about twice as common in the small group market as in the individual market (23% vs. 10%).
Policies Offer Less Financial Protection
Forty percent of agents say that today’s health plans offer less financial protection compared to two years ago; 44% say plans offer the same protection; and 14% say plans provide more protection. Forty-eight percent say small group plans offer less protection and 34% say that individual plans offer less protection.
Seventy-one percent say that the number of policies with limits has increased in the past two years. Forty-seven percent have seen an increase in the number of exclusions for prescription drugs, mental health treatment, hospitalization coverage, outpatient services, or physician services.
Forty-nine percent of agents say more plans have limits on prescription drugs and about 30% have seen an increase in the other types of limits.
In the individual market 35% are seeing more limits on inpatient services and 36% are seeing more limits on outpatient services. In the small-group market, 26% are seeing more limits on inpatient services and 24% are seeing more limits on outpatient services.
Agents see more coverage exclusions in the following areas:
• 35% prescription drugs.
• 23% mental health services.
• 17% physician services.
• 16% outpatient care.
• 13% inpatient hospital services.
Twenty percent are seeing more exclusions of outpatient services in the individual market while 12%
are seeing more in the small group market.
Most Agents Have a Lot of Experience
When asked how long that they’ve been in the health insurance business, 67% say 10 years or more; 32% say less than 10 years; and just 1% say less than a year. Fifty percent say that the majority of the policies they sell are for major medical insurance while the other half sell mostly another type of insurance. Eighty percent of health agents work in an independent office and 76% are in agencies with fewer than 10 agents or brokers.
Agents Spend Much of their Time Explaining Coverage to Clients
Agents listed which activities take up much of their time when arranging major medical insurance: 72% say it’s explaining coverage to clients; 49% say it’s investigating options across carriers and coverage levels; and 24% say it’s helping clients resolve questions and disputes about claims.
Sixty-three percent spend little or no time preparing plan booklets and 56% spend little or no time doing underwriting for the carrier. Sixty-six of agents who work with small businesses spend much of their time investigating options across carriers and coverage levels as do 35% of agents working with clients in the individual market
Some Agents Are Getting Fewer Inquiries from Small Businesses
When asked how many inquiries they have gotten from small businesses that are interested in purchasing major medical insurance over the past two years, 33% have gotten fewer inquiries; 49% have gotten the same number; and only about 16% have gotten more.
Self Insurance Is Still Sold Mainly to Large Employers
The practice of self-funding is quite common among large companies while only 13% of small employers have self-funded plans. Twenty-two percent agents sell stop-loss coverage to self-funded small employers. Twenty-seven percent of those who do the majority of their business with major medical insurance sell stop-loss insurance compared to 15% who do less of their business in major medical insurance. Agents are seeing more interest in third-party administrators, which may be due to, partly, to the fact that key rules under the ACA do not apply to self- funded plans (for example, the requirement to community rate or cover essential health benefits).
Most Agents Don’t Think that the Health Reform Laws Will be A Good Thing
Seventy-three percent of health insurance agents have a somewhat unfavorable to a very unfavorable view of health reform. Forty-nine percent of health insurance agents are Republicans, 12% are Democrats, and 25% are independent. Sixty percent to 75% say that the country, their families, and brokers, will be worse off under the ACA. Agents who have been in the business for at least 20 years are more pessimistic. Seventy-one percent of agents who do at least half of their business in major medical insurance say they will be worse off.
Fifty-four percent of agents say they know a fair about the health reform law while 29% say they know a lot. Seventy-three percent say that clients ask them questions about the law. Forty-one percent say that, when the law is in effect, theyíll spend about the same amount of time servicing policies as they do now; 28% expect to spend more time; and 26% expect to spend less time.
Agents Are Divided About the Exchanges
Forty percent of agents expect most individual health insurance policies to be sold within the exchanges while 34% expect most to be sold outside the exchanges. Sixty-two percent say tax credits will encourage more people with low or moderate incomes to buy insurance through the exchanges. Thirty-nine percent say that tax credits will only make a small difference.
Forty-six percent of agents expect to sell fewer individual insurance policies in 2014; 28% expect to sell about the same number of policies; and 17% expect to sell more.
Agent’s Knowledge Varies About Basic Programs
A number of provisions in the ACA create new programs to help consumers navigate the market and encourage small businesses to offer insurance. Agents have a role in these initiatives, including the Pre-Existing Condition Insurance Plan (PCIP). This program will only be in effect until the broader market reforms take effect in 2014, but agents can earn compensation for qualified referrals. Seventy-nine percent of agents are familiar with the PCIP, but just 27% have placed an individual in the plan.
Forty-four percent of agents who are familiar with the PCIP say healthcare accessibility and affordability has not improved under the plan; 26% say it has improved; and 13% say it’s gotten worse. Fifty percent of agents who have placed a client in the PCIP say the program improves access or affordability compared to 16% of agents who have never placed a client in the program.
Another initiative involves grants under state-based Consumer Assistance Programs (CAPs). The federal grants help residents with problems or questions about individual health insurance. Only 41% of agents who sell insurance in the individual market have heard of the state program. Twenty percent have referred a client to the program.
The Affordable Care Act also establishes a Navigator program within the exchanges, starting in 2014. Agents can serve as navigators to help individuals and small employers choose health care options. Only 17% of agents are familiar with the program.
The law establishes subsidies to encourage individuals and families to enroll in individual health insurance. It also provides tax credits to small employers that offer coverage depending on the firm size and the average employee wages. Fifty-one percent of agents who sell in the small group market have spoken with a client about the tax credit. For more information about the study, visit www.kff.org.
Nonprofit Clinics Face Increased Pressure Under Health Reform
An alarming majority of U.S. nonprofit health centers, community clinics, and free clinics expect to treat more patients without insurance and predict more challenging conditions in the upcoming year based on funding and patient trends, according to data released by Direct Relief.
In early in 2012, Direct Relief conducted a survey of nonprofit community-based health clinics, Federally Qualified Health Centers (FQHCs), and free clinics. Direct Relief also looked at trends over the past five years of FQHC data. Thomas Tighe, president and CEO of Direct Relief said, “Nonprofit clinics and health centers provide care to over 21 million people across the United States annually. America’s nonprofit community health centers, clinics, and free clinics are the backbone of our nation’s health care safety net, providing care regardless of a person’s insurance status, income, or ability to pay.”
In the wake of continuing economic turbulence and the Supreme Court ruling on The Patient Protection and Affordable Care Act, uncertainty remains about the law’s implementation in various states. As these debates continue, FQHC data reveals national increases in the number of patients who are seeking care at FQHCs, higher rates of chronic conditions among patients, and a higher percentage of patients at or below the poverty level. The study also reveals state-level differences with respect to increases and decreases in rates of Medicaid patients, those without insurance, and patients with diabetes. “How such facilities and their patients fare is and will be an important indicator of whether the basic goals of health reform –- access to affordable, high-quality care for people who don’t have it now –- are being met,” said Tighe.
Seventy-nine percent of non-profit community-based clinics and health centers saw more patients in 2011 and 86% said they expected the number of uninsured patients to increase in 2012. The clinics are also seeing more patients who are seeking care for chronic illnesses, like diabetes and hypertension, which adds to the pressure on the health centers. For more information, visit www.DirectRelief.org.
Healthcare Finance Execs Are Focusing on Accountable Care
Following the Supreme Court’s decision to uphold Healthcare Reform, healthcare finance executives have a renewed focus on developing accountable-care partnerships and implementing other healthcare reform changes, according to a survey by Firstsource Solutions USA.
Forty-three percent healthcare finance executives say healthcare reform changes should be the top priority for the healthcare finance industry for the rest of 2012. Forty-nine percent say that the top priorities should be developing accountable-care partnerships and allowing healthcare businesses to share risk, lower costs, and improve quality. However, only 56% agree that a strong accountable care organization network will trim spending and improve the bottom lines of clinics and hospitals.
In light of the Supreme Court’s decision on the healthcare reform law, 27% of executives say their top priority should be to implement tech solutions that simplify financial and administrative processes under healthcare reform while 24% said their top priority should be to implement the information technology that allows them to participate in health information exchanges. For more information, visit www.firstsource.com.
Insurers Must Now Cover Contraception Without Copays
Beginning today, August 1, insurers must cover contraceptives and other preventive health care services for women without any out-of-pocket costs in non-grandfathered health insurance plans. Nonprofit employers that do not provide contraceptives under their group health plans for religious reasons have an additional year to comply with the mandate. Other covered health services include annual well-woman exams, screening for gestational diabetes, HPV testing, and screening and counseling for domestic violence. California State law has long required health insurance policies to provide coverage for a variety of prescription contraceptive methods approved by the FDA. Now, thanks to the Affordable Care Act (ACA), this coverage will be at no cost to the policyholder.
Younger Consumers Are More Likely to Buy Life Insurance From Banks
The majority of Generations X and Y consumers would consider buying life insurance policy from their bank while only about a third of older generation (Boomers and Silent), would consider it, according a LIMRA study. Patrick Leary, assistant vice president, LIMRA distribution research said, “Growing up in a post-Graham-Leach-Bliley environment, the younger generations are open to receiving a broad spectrum of products and services from their bank. We also know these consumers are more likely to need life insurance than older generations. In addition, many of these younger consumers have no existing relationship with a life insurance agent or financial advisor so buying life insurance from their bank is not just another convenience; it provides an opportunity to get the financial protection these consumers really need.”
Consumer awareness of bank-sold life insurance has reached 54%. However, only 44% of all consumers would consider buying life insurance from a bank. Seventy percent of consumers who said they would consider buying life insurance from a bank are interested in simple products. Only one third of affluent or high-net-worth consumers would consider buying more complex life insurance policies from their bank.
Recognizing the desire for simplicity, carriers have designed single premium, simplified issue solutions that leverage technology to meet more complex needs in a simplified way, according to Leary. This approach has worked well. Much of the banks’ success with life insurance has been as a wealth transfer solution, selling single premium whole life and universal life. Leary said, “Traditionally, banks have focused on selling single premium permanent life insurance products for the purposes of wealth transfer – something banks should absolutely continue doing. Our research suggests if banks expand their energy on selling term and other basic protection products broadly to their customers, they would have more success.”
Californians Begin Getting Rebates
Today is the deadline for about 1.9 million Californians to get a total of $73.9 million in premium rebates from their health insurers. The average refund or credit is $65 per family. The rebates are the result of a provision of the Affordable Care Act (ACA) that requires health insurers in the individual and small group markets to have a medical loss ratio (MLR) of 80% or higher. For the large group market (51 or more employees), the MLR is 85% or higher.
Last year, Commissioner Dave Jones issued an emergency regulation to ensure that he had the authority to enforce the new MLR requirement in the individual market in California. He also sponsored state legislation – SB 51 (Alquist), which incorporates the MLR standard from the ACA into state law for the group markets.
The following is a breakdown of rebates that are being issues by the carriers:
• Blue Shield of California: $10.8 million rebate to policyholders in the individual market; about 239,595 subscribers affected; $45.15 average rebate per subscriber.
• Kaiser Permanente: $277,034 rebate to policyholders in the individual market; about 21,823 subscribers affected; $12.69 average rebate per subscriber
• CIGNA: $3.4 million rebate to employers in the large group market; about 89,575 subscribers affected; $37.70 average rebate per subscriber.
• Anthem Blue Cross: $1.3 million rebate to policyholders in the individual market; about 407,429 subscribers affected; $3.16 average rebate per subscriber;
• Aetna: $3.4 million rebate to employers in the large group market; about 84,428 subscribers affected; $40.50 average rebate per subscriber.
• PacifiCare: $789,615 rebate to employers in the large group market; about 63,600 subscribers affected; $12.42 average rebate per subscriber.
The California Department of Insurance is auditing the largest six health insurers in California, as well as some smaller insurers to verify the accuracy of the data they provided about medical expenses, administrative costs and profits.
Former Life Agent Gives the Industry a Bad Name
Sharon Harrelson, 55, of Clovis, was sentenced in Fresno County Superior Court to six years in jail. She was ordered to pay $105,000 in restitution as well as restitution for any future victims. Harrelson talked one elderly woman into giving her $60,000. She promised to invest the money into CD accounts with a local bank. Instead, Harrelson deposited the money into her personal checking account for her own use.
Another elderly woman, living in a Fresno retirement home, said Harrelson charged $8,500 to help her pre-plan for Medi-Cal long-term care. The woman never received the services. Charges were filed by the Fresno County DA and Harrelson was arrested on March 6, 2012. Harrelson, a former life insurance agent, pled no contest to four felony counts of stealing from an elderly person. The plea agreement was reached after four separate complaints were filed by the Fresno County District Attorney’s Office.
Harrelson was originally charged with 20 felony counts of theft from an elder or dependent adult, along with five felony counts of embezzlement and three counts of felony grand theft. The charges stem from a two-year joint investigation by the Department of Insurance (CDI) Investigations Division, Fresno County Sheriff’s Department Elder Abuse Unit and Madera County Sheriff’s Department. Investigators found that while Harrelson was employed by a Fresno insurance agency in 2009, she lied to clients that she was part owner of the agency and had them pay service fees directly to her. The agency found discrepancies in its records, fired Harrelson, and reported the embezzlement to the Fresno County Sheriff’s Department. Since Harrelson’s arrest on the original complaint, additional victims have alleged similar elder abuse. The Fresno Police Department has also gotten complaints from Harrelson’s previous clients, alleging that she stole from them or misrepresented herself while working at local funeral homes. As a result, Harrelson was charged in three additional cases.
Critical Illness Guides
Authors Edward L. Mueller, Jr. and Laura Spencer have co-written two guides, “A Consumer’s Guide to Critical Illness Insurance; A Living Benefit” along with a senior guide, “Keeping Your Gold in the Golden Years.” The goal is to inform readers of the importance of purchasing critical illness insurance coverage and to explain why health insurance alone isn’t sufficient to ward off financial devastation from a critical illness. For more information, visit www.criticalillnesssupport.com.
Disability Leave Software
Symetra is offering its FastTrack software tools to help employees return to work from short-term and long-term disability leaves. FastTrack tools are provided by “GettingHired,” LLC. Symetra absence managers will determine the requirements of a claimant’s job; collect physical capabilities data from medical providers; and identify interim work assignments consistent with the employeeís limitations. Career Service Tools help employees on long-term disability leaves re-enter the workforce by demonstrating their employability and motivation to get back to work. The tools provide one-on-one career counseling, vocational support, mentoring, interview skills training, and job placement services. For more information, visit www.symetra.com.
Voluntary Accident and Cancer Insurance Products
Guardian Life launched accident and cancer insurance policies that give employees access to important health and financial protections. The accident insurance and cancer insurance policies are fully portable. In addition, the cancer offering includes preventative coverage measures, including screening and early detection tests. These new products are offered as an employee-paid option. For more information, visit: www.guardianlife.com
Fixed Index Universal Life
Allianz Life enhanced it Allianz Life Pro+ Fixed Index Universal Life Insurance, adding a blended index allocation option with a 2% annual floor. It is designed to offer more choice and flexibility for policyholders who want to grow the cash value of their policy. The blended index allocation is made up of the Dow Jones Industrial Average, EuroSTOXX 50, Russell 2000, and the Barclays Capital U.S. Aggregate Bond Index, with a 2% annual floor that provides another level of protection against market volatility.
Humana teamed up with “dLife” Healthcare Solutions to offer a diabetes self-care program for Medicare Advantage members. Humana launched a pilot in August 2011 with more than 18,000 member participants. The “My Diabetes Path” program engaged Medicare Advantage members in a multi-channel, multimedia intervention that leveraged dLifeís proprietary content, tools, and online community to promote better self-management of their diabetes and improved quality outcomes. For more information, visit www.humana.com.