by Michael Lujan, RHU, CHRS

The Art of War (and Individual Health Insurance)   By now, most California agents have decided how they will approach the upcoming open enrollment for individual and family plans. By all accounts, most agents are coming back for more. Battletested and better informed by last years’ experience, these agents are opportunists in the best sense of the word. What looks like an insurmountable barrier to other agents, they just call it another challenge. They have built successful agencies because of this ardent perspective, not in spite of it. They’re smart, resourceful and will bring new resources and technology to this season. They will find a way to make this work.

Other agents may be more cautious or on the fence, searching for a compelling reason to invest more time, money or emotion into the completely overhauled individual market. This is especially true if they found the whole process unbearably difficult during the first open enrollment. They’ve done their financial analysis and may have determined the new commissions are too low to support the additional effort required. Or experience has taught them to wait and learn by others’ mistakes. These agents have a solid track record of success, mostly because they’ve always taken measured steps and gathered data before leaping.

Most successful agents follow sound business strategies like those shared by the great general and strategist Sun Tzu who said, “Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” No, we’re not talking about a literal war against a person, army, or organization. I’m talking about the age-old battle to run a successful agency and the responsibility of meeting payroll. It’s about serving their clients well and delivering on promises. Last year, that was hard to do for both on and off exchange plans as most agents had more questions than answers. For both, I offer this overview and my perspective.

What new tools, partners or strategies are needed? Governor Brown signed legislation that changes the open enrollment period for coverage in the individual market next year to November 15, 2014 through February 15, 2015. This means that agents have even less time to enroll while also renewing their active clients. Consider what you have to work with and if your tools (weapons) are suitable for the upcoming enrollment. For example, how effective are your telemarketing and SEO or leadpartners in finding new prospects? Can you afford to use the same tactics in 2015? If targeting the huge Latino market, do you really have the market expertise and language skills for this? Have you considered running your marketing campaign by an expert in this niche market? Many community-based open enrollment events are seeking agents to help enroll. Are you connected with these events? How many enrollments can you do to be successful?

Your clients are being solicited by other agents and may demand time-intensive quoting and comparisons of their options. Some are interested in comparing group versus individual policies and more complex quotes with subsidies and multiple contribution scenarios. How well does your current technology serve this need? Do you know everything you need to advise clients through this important decision? The off-exchange individual market is robust and competitive. WellPoint, for example, recently reported that about 20% of the roughly one million customers it expected to enroll in new plans nationwide would be off the exchanges. Other carriers estimated 30% to 40% of their enrollees chose coverage outside the exchanges. In California, Assurant, Sutter Health Plan, and other plans are actually entering the individual market (and neither are on-exchange plans). How well versed are you in these new products and are you appointed?

Consumer driven plans are growing, but may need a closer look for individual policies. The popularity of individual health savings accounts is at risk due the elimination of the individual deductible. This means that families with HSA plans could have to pay up to twice as much for care than before – over $6,000 more than they did in 2013 – if just one member of the family has an accident or comes down with a serious illness. With the appeal of Bro and Silver plans, this is an important caution for your clients who just started to understand how HSAs work or expect they will work the same as in the employer market. Be familiar with these pitfalls and prepared to explain them as these rates are appealing.

Opportunities multiply as they are seized. According to new data from the Kaiser Family Foundation, more than 544,000 of the 1.4 million Californians enrolled through Covered California were previously uninsured. There are still millions of uninsured Californians and not all are Medi-Cal or subsidy-eligible. Think self-employed, recent grads, post-COBRA and the constant wave of entrepreneurs who start with individual policies before growing large enough for group. Also new, certified agents may now receive some compensation ($58) for completed Medi-Cal enrollment.

The exchange is competitive. Covered California will offer just 10 plans in 2015. Contra Costa Health Plan decided to leave. There’s no big scandal; just a business decision that affects only 1,100 members. They did enroll over 30,000 in Medi-Cal, which is their real focus. No major changes and the major carriers are still participating in 2015. Also, there will be no linkage from your website to Covered California this year (Web-based entity). That decision could be made in 2015 for 2016 so plan on inperson or phone enrollment this year.

There are no big benefit changes this year. The Covered California plan designs won’t change much for 2015. That is good news if you like your plan and want to keep it (pun intended). Pediatric dental coverage will be embedded this year and optional dental for adults will be offered. Public comments to revise benefit designs (e.g. lower ing the OOP max, high coinsurance for expensive drugs) were not ignored but won’t happen before 2016. This is an area where off-exchange plans can be more appealing as the amount of financial exposure for some, may outweigh the benefit of a partial subsidy (APTC).

The rates are stable, so far. About half of Covered California participants will see their rates go down, stay constant or rise less than 5%. Only a few (13%) will see rates rise more than 8%. You can check you local region here: CC-health-plans-booklet-2015.pdf

The narrow network issues that caused so much confusion this year are slowly getting resolved. While not a new concept, networks got very narrow in 2014 and both providers and carriers were not clear about who was in or out. The exchange is working closely with carriers to ensure their provider directories are accurate and Anthem Blue Cross announced that it has already added 6,300 doctors to its network. For some perspective on narrow networks in other states, consider New York. With only a few exceptions for rural areas, the exchange in New York (NY State of Health) does not cover nonemergency, non-network providers. For the most part, it’s in-network only in NY.

In California, agents do not have to reapply on behalf of their individual clients and clients can just keep their bill and they’ll keep your plan, according to Covered California. Of course, some clients may want to examine their options just in case or if they want to try their hand at another network.

More than 12,000 licensed insurance agents were certified in 2013 for the inaugural open enrollment season. While it is estimated less than half of those certified agents actually sold and enrolled consumers in Covered California, these certified agents accounted for 80% of the in-person enrollment in the exchange. More than 526,000 Californians enrolled in the exchange through an agent and hundreds of thousands more off-exchange. The agent role in the individual market is secure but requires preparation and possibly new tools and partners. I would be remiss if I did not make a plea for joining CAHU. Your success depends on timely and accurate information; which flows generously from your local and state CAHU chapter meetings and updates. I’ll close as I started by quoting Sun Tzu, “In the midst of chaos, there is also opportunity.”


Michael Lujan, RHU, CHRS is Co Founder and Chief Sales Officer for Limelight Health, a Silicon Valley-based startup with a suite of cloud-based technology products, qualified leads and sales tools for health insurance agents. In 2012, Lujan helped establish Covered California. He served as director of Sales and Marketing for the individual and small group segments and recruited more than 12,000 agents to get certified. A former agent, general agent and director of sales for Blue Shield of California, Lujan is an outspoken advocate for the agent distribution channel, small business and the uninsured.†Michael is CAHU President-Elect and Chair for CAHU’s new Diversity Task Force, aimed to promote our diverse agent membership and mobilize licensed agents to serve all Californians.