Gaming Obamacare to Benefit the Few

by Wendell Potter on March 25th, 2013

Law asks many groups to help consumers ‘navigate’ choices, but brokers and agents want to save that business for themselves.

We’re just a bit more than six months away from when Americans will have to begin making decisions about purchasing health insurance, but, according to a survey released last week, more than two-thirds of people who are currently uninsured don’t have much of a clue how Obamacare will affect them, including the fact that coverage will soon be mandatory.

On October 1, as required by the law, states must have online insurance marketplaces (known as exchanges) up and running so their residents can shop for coverage. Some states will be operating the exchanges on their own, but most have decided to either partner with the federal government to operate them or have the feds do all the work.

After October 1, the next most important date Americans need to know about is January 1, 2014. That’s when the mandate to have coverage goes into effect.

Making sure Americans become aware of that mandate and sign up for coverage before the end of the year will be an enormous undertaking, which is why Obamacare also includes a provision authorizing a broad range of organizations to serve as “navigators” to educate people about the law’s requirements and help them find plans that meet their needs.

The law states that entities eligible to be navigators—and to receive government grants to do the navigating—include “ trade, industry, and professional associations, commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused nonprofit groups, chambers of commerce, unions, resource partners of the Small Business Administration, other licensed insurance agents and brokers, and other entities” the Feds deem capable.

In the past, agents and brokers have largely had the marketplace all to themselves because there have been no other formally recognized “navigators” to help people decide what kind of insurance policy makes the most sense for them. The agents and brokers have made a good living as middlemen between consumers and insurance companies because the insurance companies they represent pay them a commission for every policy they sell.

As you can imagine, agents and brokers are not happy that all those other organizations will be able to help folks “navigate” the health insurance world. And so they are trying to get laws passed at the state level that for all practical purposes would make it difficult, time consuming and expensive for any of those other groups to qualify as navigators.

The agents and brokers initially tried to get a committee of the National Association of Insurance Commissioners to adopt language to protect their interests. When that committee rebuffed them, they began pleading their case to another NAIC committee and also directly to state lawmakers.

As a result, bills are being introduced all over the country that might as well be described as the “Agent and Broker Income Protection and Enhancement Act.”

Take the measure introduced recently in the Missouri legislature by Rep. Christopher Molendorp — who happens to own the Christopher Molendorp Insurance Agency in Raymore, Mo.  Like most of these bills around the country, Molendorp’s would establish restrictive licensure requirements that all would-be navigators would have to meet. And it would prohibit navigators who are not licensed agents or brokers from providing any advice to individuals or employers about specific plans or pointing out which ones might be better or worse than others.

This clearly is not what Congress intended, but the Affordable Care Act gives states fairly wide latitude to set up the navigator programs within their jurisdictions.

In fact, Jay Angoff, a former Missouri insurance commissioner who served as head of the Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services,  says bills like Molendorp’s would be a disservice to consumers.

“The beauty of the exchange system is that, if it works, you don’t have to use an agent,” Angoff said during a recent panel discussion on how states are implementing Obamacare. “You can go directly to the Internet, you don’t have to use an agent. If you want to use an agent, you can, but you don’t have to. I would hate for exchanges to build in the extra expense that requires people to use an agent that raises the price of insurance to be more than it should be based on the electronic system.”

But that is exactly what will happen if bills like Molendorp’s are enacted.  Agents and brokers are hoping that the bills will even make it unlawful for people to buy coverage on the exchanges without first going through a licensed agent or broker.

Consumer groups are working at the state level to keep the bills from passing, but agents and brokers have a lot of clout in many state legislatures. If the consumer groups lose, premiums of policies purchased through the exchange will be much more expensive than necessary.

Wendell is a Senior Analyst at The Center for Public Integrity where this first appeared on 3/25/13.

{ 8 comments… read them below or add one }

Justin Case March 26th, 2013 at 12:59 pm

Why is anyone going to use Obamacare anyways? No one can force you to use it.

Art Patriart March 26th, 2013 at 1:19 pm

The US is completely corrupt at all levels. It is in our culture to game the system any way possible to rip off others for profit. Nothing will work, the plutocracy will be successful in their quest for all of the wealth and power.

abinico warez March 26th, 2013 at 3:50 pm

Don’t want it, don’t need it – how can I avoid it? Will lie if needed.

Carl Collicott March 26th, 2013 at 8:14 pm

The reason no one is required to participate in the Health Care Act, as stated in section 1555, is simply the Act amends Public Law 93-406, the Employees Retirement Income Security Act, an International Agreement for Foreigners, and government owned corporation employers.
google; Title 5 U.S.C. chapter 89 Affordable Care Act

One Hundred Eleventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the fifth day of January, two thousand and ten
An Act
Entitled The Patient Protection and Affordable Care Act.
Public Law 111-148 ( available on line)

TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS
Subtitle A—Immediate Improvements in Health Care Coverage for All Americans

Sec. 1001. Amendments to the Public Health Service Act.

Sec. 1555. Freedom not to participate in Federal health insurance programs.

SEC. 1555 ø42 U.S.C. 18115¿. FREEDOM NOT TO PARTICIPATE IN FEDERAL
HEALTH INSURANCE PROGRAMS.
No individual, company, business, nonprofit entity, or health
insurance issuer offering group or individual health insurance coverage
shall be required to participate in any Federal health insurance
program created under this Act (or any amendments made
by this Act), or in any Federal health insurance program expanded
by this Act (or any such amendments), and there shall be no
penalty or fine imposed upon any such issuer for choosing not
to participate in such programs.

26 U.S.C. §406. Employees of foreign affiliates covered by section 3121(l) agreements
EFFECTIVE DATE OF 1974 AMENDMENT
PUBLIC LAW 93-406 EMPLOYEES RETIREMENT SECURITY ACT
Amendment by section 1016(a)(4) of Pub. L. 93–406 applicable, except as otherwise provided in section 1017(c) through (i) of Pub. L. 93–406, for plan years beginning after Sept. 2, 1974, but, in the case of plans in existence on Jan. 1, 1974, amendment by Pub. L. 93–406 applicable for plan years beginning after Dec. 31, 1975, see section 1017 of Pub. L. 93–406, set out as an Effective Date; Transition of Rules note under section 410 of this title.

John Whalen March 27th, 2013 at 8:59 am

Sorry Carl.

Sec. 1555 simply means that people can’t be forced to use a “Federal” health insurance program created by the act. But Obamacare itself is not a “health insurance program” – it’s a law governing health insurance and the requirement for people to have insurance. So, Sec. 1555 does not allow people to opt out of Obamacare.

People who don’t want to comply with Obamacare by using a “federal” health insurance program can comply with Obamacare by using a private insurer or they can comply with Obamacare by using a state run program – if their state offers one. But in the end, they still must comply with Obamacare.

Carl Collicott April 10th, 2013 at 12:37 pm

Sorry John Whalen, the PPACA is an amendment to the Public Health Service Act, portion reproduced below, addressed in Title 5 U.S.C. Chapter 89 “group health plan”. Administered through the International labor Organization, the states are countries party to the agreement, that’s why it’s voluntary.

Public Health Service Act

July 1, 1944 [H.R. 4
624] | [Public Law 410] 58 Stat. 682
TITLE I—SHORT TITLE AND DEFINITIONS
SHORT TITLE
SEC. 1.
Titles I to V, inclusive, of the Act may be cited as the “Public Health Service Act”.
SEC. 605.
(a) Section 7 of the Act of September 7, 1916, entitled “An Act to provide compensation for employees of the United States suffering injuries while in the performance of their duties, and for other purposes”, as amended (U.S.C., 1940 edition, title 5, sec. 757),………..

David Walters April 18th, 2013 at 10:27 am

I’m an INDEPENDENT INSURANCE AGENT and I’ve “sold” health insurance for almost 7 years now. But I spend most of my time helping my customers dodge bullets from the insurers.

It is a constant challenge to force the insurers to comply with State law that, in most cases, is intended to provide consumer protections. In my short career there have been countless instances where a customer would have been utterly screwed were it not for my FREE INTERVENTION ON BEHALF OF THE CUSTOMER AND IN OPPOSITION TO THE INSURER.

The above article and many others that I’ve read seem to suggest that agents are parasites on the system and perform no services for the customer that would even earn them the status of beneficial symbiotes.

Nonsense. I’m easily the best friend any customer could possibly have when dealing with the insurers. Were it ethical to divulge a client list I would along with their phone numbers and you can bet that 99% of my customers are perfectly delighted with the care and dedication I extend to them. I have a 90%+ retention rate at renewal.

Although there may be agents out there who are, indeed, uncaring parasites. They decidedly are in the minority. And, most of those seem to sell those limited benefit plans that we shun.

I can assure you that if the ACA forces agents like me who adhere to our legally defined responsibilities as the CUSTOMER’S FIDUCIARY (not the insurers) a large number of you will rue that day…or call 1-800-4LAWYER.

Carl Collicott April 29th, 2013 at 9:32 am

History of the Public Health Service…. The entity that will administer the Affordable Care Act.
………..we should all feel better………….
Tuskegee syphilis experiment
(full version on line)
From Wikipedia, the free encyclopedia
The Tuskegee syphilis experiment[1] (also known as the Tuskegee syphilis study or Public Health Service syphilis study) was an infamous clinical study conducted between 1932 and 1972 in Tuskegee, Alabama by the U.S. Public Health Service to study the natural progression of untreated syphilis in poor, rural black men who thought they were receiving free health care from the U.S. government

By 1947, penicillin had become the standard treatment for syphilis. Choices available to the doctors involved in the study might have included treating all syphilitic subjects and closing the study, or splitting off a control group for testing with penicillin. Instead, the Tuskegee scientists continued the study without treating any participants and withholding penicillin and information about it from the patients. In addition, scientists prevented participants from accessing syphilis treatment programs available to others in the area.[4] The study continued, under numerous US Public Health Service supervisors, until 1972, when a leak to the press eventually resulted in its termination. The victims of the study included numerous men who died of syphilis, wives who contracted the disease, and children born with congenital syphilis.[5]
In 1972 the Tuskegee Study was brought to public and national attention by a whistleblower, who gave information to the Washington Star and the New York Times. Heller of PHS still defended the ethics of the study, stating: “The men’s status did not warrant ethical debate. They were subjects, not patients; clinical material, not sick people.”[11]
Medical ethics considerations were limited from the start and rapidly deteriorated. To ensure that the men would show up for the possibly dangerous, painful, diagnostic, and non-therapeutic spinal taps, the doctors sent the 400 patients a misleading letter titled “Last Chance for Special Free Treatment”. The study also required all participants to undergo an autopsy after death in order to receive funeral benefits. After penicillin was discovered as a cure, researchers continued to deny such treatment to many study participants. Many patients were lied to and given placebo treatments so researchers could observe the full, long term progression of the fatal disease.[12]
After penicillin was found to be an effective treatment for syphilis, the study continued for another 25 years without treating those suffering from the disease.
In 1968 William Carter Jenkins, an African-American statistician in the PHS, part of the Department of Health, Education, and Welfare (HEW), founded and edited The Drum, a newsletter devoted to ending racial discrimination in HEW. The cabinet-level department included the CDC. In The Drum, Jenkins called for an end to the Tuskegee Study. He did not succeed; it is not clear who read his work.[18]^ Bill Jenkins left the PHS in the mid-1970s for doctoral studies. In 1980, he joined the CDC Division of Sexually Transmitted Diseases, where he managed the Participants Health Benefits Program that ensured health services for survivors of the Tuskegee Study.
• Document from Tuskegee Syphilis Study, requesting that after test subjects die, an autopsy be performed, and the results sent to the National Institutes of Health

Non-consensual experiments in Guatemala
Main article: Syphilis experiments in Guatemala
In October 2010 it was revealed that in Guatemala, Public Health Service doctors went even further. It was reported that from 1946 to 1948, American doctors deliberately infected prisoners, soldiers, and patients in a mental hospital with syphilis and, in some cases, gonorrhea, with the cooperation of some Guatemalan health ministries and officials. A total of 696 men and women were exposed to syphilis without the informed consent of the subjects. When the subjects contracted the disease they were given antibiotics though it is unclear if all infected parties were cured.[15]

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