Gaming Obamacare to Benefit the Few

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.

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5 thoughts on “Gaming Obamacare to Benefit the Few”

  1. 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.

  2. 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
    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)

    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.

    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
    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.

  3. 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.

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