Health Care Reform and the Insurance Agent
The number of people uninsured may change depending on who and how they are calculated, but those with something at stake in Health Care Reform are unvaried. Whether it be the government, the insurance companies, or the millions of insured or uninsured Americans, all agree that the health care system needs to change, but none can agree on quite how to do it. In the tangles of this ongoing “negotiation” is the insurance agent who has a vested interest from all angles of the debate. There are two key points in health care reform which have the potential to drastically impact the agent.
The first point is probably also the most highly controversial portion of the current health care reform act; a government sponsored health care program called the Public Option. The threat of this plan really boils down to cost and competition. On average, up to 20% of what American’s pay for their health insurance goes to the insurance company to be used directly on administrative costs, marketing, and profits. In contrast, the proposed government run plan minimizes those additional fees by close to 15%. The typical American is not likely to need a commercial during Sunday night football to think about purchasing government healthcare. The government is also not going to need to generate profits to keep shareholders happy and they can raise taxes or cut reimbursements to providers at will to pay for funding shortfalls. Therefore, a government run plan will provide a cheaper option. Looking at purely cost, cheaper is obviously better for the average individual, but what happens to the private insurance companies?
The greatest concern over a government run option is that employers and individuals would likely choose a cheaper government plan. As an insurance agent the issues over whether that plan would provide the same quality of care really become moot when you look simply at the fact that a good portion of employers and individuals would choose the government plan. There would then be a new and unique competition in the marketplace between the government and the insurance company. After cost and tax incentives entice employers and individuals away from their current plans, it follows that the government option may well crowd out the private sector from the market. If that happens, then insurance agents will be out as well.
One element of health care reform which doesn’t seem to be of huge debate is the proposed Health Insurance Exchange. The exchange as proposed, would allow people looking to buy insurance to visit a virtual marketplace, across state lines where individuals and small businesses could comparison shop. The government would be overseeing the exchange and insurance companies would compete against other carriers and/or the Public plan. In effect that competition would theoretically keep rates lower.
This is really modern technology at its best. Smaller and more localized insurance companies can escalate the level of competition with larger, national companies by the click of a button and therefore make insurance in general more cost competitive and affordable to more individuals. The exchange has great potential for generating new business from new resources. This also gives the average American the freedom to independently shop for the plan that suits them best at the price they can afford. In general these are all good things for the insurance companies, the government and the individual. Even the agent will benefit from having more people in the market place buying coverage as the proposals being considered don’t exclude agent participation.
Be it good or bad, any kind of health care reform is inevitably going to impact the insurance agent. They are the one group that no matter what the outcome, there will be an impact either personal or professional.
