For many Maryland consumers, open enrollment on the state’s health insurance exchange has meant headaches and frustration. For some — namely, the 269,300 who managed to secure coverage — it meant relief.
But for insurance brokers, the botched launch of Maryland Health Connection and the turbulent open enrollment period, which ends Monday, meant validation — their services are still valued and their jobs secure. At least for now.
“Brokers are still doing well, although it hasn’t come without a lot of additional effort and maybe even some changes within the business model,” said David Noel, president of the Maryland Association of Health Underwriters, which represents a small chunk of the state’s 23,000 licensed health insurance brokers (also called “producers”).
Several brokers said business has been stronger than expected since the website launched Oct. 1, despite widespread initial fears that the exchange would render their services obsolete. But, as it turns out, the malfunctioning exchange for them has been a blessing.
Even though Maryland Health Connection is where individuals shop for plans, and most brokers focus on the group market rather than the individual market, several said they were still concerned about its launch.
If the exchange had functioned properly from the start, “brokers probably wouldn’t have done as well as we’ve ended up doing,” Noel said. “It may have gone the opposite way, especially if small groups got rid of their coverage and sent their employees to the individual exchange.”
If that happened, brokers wouldn’t necessarily have lost clients, but they’d work harder for the same compensation, said Noel, who is vice president of sales at WorkforceTactix Inc., a brokerage and consulting firm in Sparks.
Brokers earn commission from insurance companies when they sell that insurer’s plan. Payment structures vary, but they generally receive a small percentage of the premium paid by the consumer, often between 2 and 5 percent.
“As opposed to having one two-hour meeting with the whole group, I’d have to meet for one hour with all 20 employees,” Noel said. “So that wouldn’t work out better in terms of profits. … If the exchange had worked perfectly, some small brokerages that focus on individuals would have been in tremendous jeopardy.”
Brokers may have dodged a bullet with the individual exchange, but another challenge looms down the road: the Small Business Health Options Program, commonly called the SHOP exchange. The small-business market is many brokers’ bread-and-butter, so many people said SHOP poses a much greater danger to brokers’ livelihoods.
But brokers got a break there, too. State officials delayed launching SHOP until 2015 — it was originally supposed to go live in October 2013 — because they needed more time to perfect the technology.
“Delaying the SHOP exchange was a sigh of relief for us, because that will be one more avenue employers can go to other than your traditional broker,” said Susan Snyder, a broker with Potomac Basin Group Associates.
It’s not that brokers weren’t invited to participate in open enrollment. Nearly 2,000 received special certification from the state to sell policies via Maryland Health Connection. But few predicted the extent to which consumers, insurers and state officials have relied on them.
Carolyn Quattrocki, executive director of the Governor’s Office of Health Care Reform, insisted officials “always” envisioned brokers playing an important role — just perhaps not this large of one.
When problems with the exchange emerged, officials began encouraging consumers to seek help from brokerage firms. In January, they launched the “Producer Referral Program” to connect consumers with local brokers.
Brokers also helped Evergreen Health Co-Op, a new insurance company in Maryland, enroll its first members.
Evergreen abandoned the dysfunctional individual exchange and turned its focus to small-group customers. CEO Peter Beilenson said brokers helped Evergreen enroll about 350 people in that market in about two weeks.
“We definitely would not have been successful without the brokers,” he said.
Beilenson said he’s “very skeptical” the SHOP exchange will ever go live — Quattrocki declined to comment on that point — so he expects brokers will continue to be heavily involved in that market.
Others aren’t so sure.
“We’re waiting with bated breath about the SHOP exchange, because if it does poorly, we’ll do well,” Noel said. “But if it’s successful, it would be imperative for us to continue to convince exchange officials of our relevance and value to the marketplace, which I’m happy to do any day of the week.”
Health insurance brokers did plenty of persuading back when state officials were implementing the Affordable Care Act and designing the exchange. To preserve their role in the industry, brokers launched aggressive lobbying campaigns, which yielded several legislative victories.
One of the most crucial — according to Bryson F. Popham, a lawyer and lobbyist who represented three Maryland-based broker associations — was a bill that gave brokers the exclusive authority to advise consumers about insurance plans sold outside of the exchange.
The bill limited the authority of so-called navigators, people hired by the exchange to assist with enrollment.
“Had we not done that, who knows how brokers would be faring?” Popham said. “The navigator restrictions made a huge difference.”