Explosive growth in the individual market is forcing brokers who work with very small groups to change their business models —and often receive less commission in the process.

Analyzing data submitted by insurers to state insurance departments, the Kaiser Family Foundation determined that 15.5 million people had major medical coverage in the individual insurance market in  2014 — both inside and outside public health care exchanges. The figure is is 4.8 million or 46% above previous levels, which have hovered around 10.6 million since 2010.

“The growth is fascinating. How many times do you hear of a market growing at that pace?” says Mike Thompson, principal with PriceWaterhouseCoopers in New York City. “That is incredible.”

For brokers who traditionally work with small group (under 50 lives) the expansion is more troubling than fascinating, as there is a “substantial shift from working with small group to working with individuals,” says J. Darlene Tucker, financial representative at fraternal financial services organization Modern Woodmen of America in Scotts Hill, Tenn.

Prior to the passage of the Affordable Care Act, Tucker estimates 10% to 15% of her business was individual enrollments. Now, it is close to 50%. “That is not necessarily by choice,” she says. “You have go where the need is to serve the need of consumer.”

Tucker explains that many smaller groups, especially those with lower paid rank-and-file employees who are eligible for subsidies, find they can better spend money on other items then health care and in fact may be hurting an employee by offering health care, as it would make them ineligible for government subsidies under individual coverage.

Meanwhile, individual enrollments are “not worth it,” Tucker says, as the commission rarely equals the time put into the clients. She recalls spending 35 to 45 hours recently helping a client deal with a marketplace glitch. “That would be interesting if it was only one situation like that,” she says.

Also see: Humana CEO: We're part of the problem

People who worked with her in small group are coming to her for individual coverage now because they trust her. Although she may lose money on them, she still helps. “What are you going to say?” she asks, “’I can’t help you because I will lose money?’”

“I’m making a third of what I used to make and doing three-to-four times the work,” she says. Even when things work correctly, “it is still going to take significant more time [than it would] to take care of a group of 50 or 100 .,.. if you do everything from scratch as opposed to a group basis.”
Large group

For larger group brokerages, it is business as usual. Alan Schulman, president of the Maryland Association of Health Underwriters, says that there is no doubt more people than ever are going to the individual market or exchanges, but brokers he talks with are still focused on group.

Also see: What high-performing, successful brokers do to build their business

With group, “you can help more than one person in less time than it takes to help someone enroll,” Schulman, president of Insurance Benefits & Advisors in Rockville, Md., says. “Trying to enroll through the exchanges is quite tedious. Enrolling group through existing sources out there is very, very easy. You can work with a 10 person group in less time than one individual.”

In this market, “brokers who service employers continue to service employers in the way they have historically done so through group insurance,” adds pWc’s Thompson.

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