The recently released white paper from the National Association of Insurance Commissioners on the role of producers in state exchanges, while helpful, leaves many crucial questions unanswered.

The white paper, “The Comparative Roles of Navigators and Producers in an Exchange: What are the Issues?”, is intended to help state officials identify and resolve the major issues concerning the roles of navigators and producers in state exchanges under the Patient Protection and Affordable Care Act.

A subgroup of NAIC’s Health Insurance and Managed Care Committee tasked with analyzing PPACA’s state exchanges released the eight-page draft report on May 19. It’s expected that the full committee will consider approving the draft in June.

For more details on the white paper, click here.

NAIFA President Terry K. Headley feels the white paper is helpful in the form of guidance, “but for me, there was not a lot of definitive information that we didn’t already know. It leaves so much to the discretion of the Secretary of Health and Human Services and to the states to work through,” he says.

Headley shared three key takeaways from the white paper:

  1. What will be the actual role, function and responsibility of the navigators?
  2. Will there be an implication that the navigators will need to be certified and properly licensed?
  3. Will the state based exchanges really bring more of the uninsured population into the health care coverage arena?

State insurance departments have made sure that agents are subject to very stringent standards, from the initial licensing exam to education requirements and ongoing training necessary to keep up to date with all the changes, rules and regulations. Headley finds it hard to believe that navigators, who might be compensated with a per capita fee, are going to have that same level of commitment and interest in serving consumers who use the exchanges.
“One of our main concerns is that with navigators you introduce an additional element of confusion in the marketplace in the eyes of the consumers. Unlicensed and uncertified people advising consumers in the exchanges — I can’t imagine the outcome being particularly positive.”

 “It may not be financially or economically feasible for agents and brokers to be that active within the exchanges, especially if it is fee-based compensation,” he says.

“When you look at the type of entities they are looking at for navigators — trade associations, professional associations, chambers of commerce, non-profit groups, unions — I just don’t think they are going to have much of an appetite for that kind of equity. There’s not going to be enough of an incentive to motivate them to get involved,” Headley says.

“Many states have laws or statutes on the books that prohibit an agent or broker from receiving a fee for the placement of health insurance. A legislative remedy would be necessary in order to allow consulting fees to be paid to agents and brokers as they assist individuals, small or large employers, servicing and claims assistance,” Headley says.

“NAIFA members are anticipating this and starting to transition their practices to a fee-based arrangement, more of a consulting fee, but this does require a special license,” Headley says.

“We’ve always said from the beginning that we want to make sure vibrant and healthy private health insurance market on the outside of the exchange as well. What the role will be within the exchange? This is something that is yet to be defined,” he says.

“My vision of this is a lot of structure being built, a lot of costs with little impact or result with the uninsured,” Headley says.

Tom Schuetz, co-president of Group Service Inc. based in Bettendorf, Iowa, says that his state is gearing up for the exchange.

He reveals that insurance company executives have spoken at public hearings and they have indicated that they are not sure if there is a need for agents in the state exchange setting.

“I think many of us our preparing to move into a fee-based arrangement,” Schuetz says. “You really start to look at the larger group market – there will be a lot more competition in the 50-and- above and 100-and-above markets. Those of us who want to stay in the business and want to continue to thrive – that is where we are focusing our energy.”

Moving into a fee-based market is happening all over the map, but it is not something that advisers are used to doing, notes Schuetz. “We are all really finding our way and testing the waters in forms of different business models. It’s an exciting time and in some respect scary at the same time. We are used to a system that has been around for a long time.” 

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