Insurers avoiding some of the sickest patients by using broker disincentives

Licking Wounds, Insurers Accelerate Moves To Limit Health-Law Enrollment

By Jay Hancock
Kaiser Health News, February 4, 2016

Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.

In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.

Last year, these “special enrollment” clients were much more expensive than expected because lax enforcement allowed many who didn’t qualify to sign up, insurers said. Nearly a million special-enrollment customers selected plans in the first half of 2015, half of them after losing previous coverage.

In addition, Cigna and Humana, another big health insurer, have ceased paying brokers to sell many higher-benefit “gold” marketplace plans for individuals and families while continuing to pay commissions on more-profitable, lower-benefit “bronze” plans, according to documents and interviews.

Gold plans typically enroll sicker members than do less comprehensive policies, say insurance experts. As of June, more than 695,000 people had enrolled in gold plans.

But the retreat from broker sales, which includes last year’s decision by No. 1 carrier UnitedHealthcare to suspend almost any commissions for such business, erodes a pillar of the health law: that insurers must sell to all customers no matter how sick, consumer advocates say.

By inducing brokers to avoid high-cost members — whether in gold plans or special enrollment — the moves limit access to coverage and discriminate against those with greater medical needs, said Timothy Jost, a law professor at Washington and Lee University and an authority on the health law.

“The only explanation I can see for them doing this is risk avoidance — and that is discriminatory marketing and not permitted,” he said. “When people wonder why we’re not getting millions more enrollees in Affordable Care Act health plans, one reason is, the carriers are discouraging it.”

The insurance industry says it is not discriminating but adjusting to market realities including higher-than-expected medical claims and the failure of a government risk-adjustment program called “risk corridors” to cover much of that cost.

“Without making necessary changes to coverage and benefits, there was no way for health plans to remain in the market or to offer the kind of coverage as they had in the past without sustaining huge losses,” said Clare Krusing, spokeswoman for America’s Health Insurance Plans, an industry lobby.

The nonpartisan Congressional Budget Office estimated as recently as last March that 21 million consumers would be enrolled by now in private health insurance plans sold through online marketplaces. Now CBO forecasts 13 million will sign up this year.

Brokers are critical to sign-ups and the success of the health law. For 2014, 44 percent of Kentucky enrollees bought through brokers. So did 39 percent of the California enrollees. No similar figures are available for the marketplace that serves most states,

With varying commissions, brokers will be tempted to promote only plans they make money on, even if those aren’t the best for some customers, said John Jaggi, an Illinois broker and consultant.

“Now they’re really forcing the agent to think only of the plan that he gets compensated for,” he said.



By Don McCanne, M.D.

No matter what legislation, regulations, rules or advisories our government produces, the private insurance industry will always find ways to skirt the intent of this oversight in order to maximize their business goals, usually at a cost to patients and public and private payers. The current efforts of insurers to manipulate the brokers are a prime example of how they will continue to work the system to advance their own interests.

As the Affordable Care Act was being crafted and then implemented, there was a push to include brokers as intermediaries who would provide customer access to the exchange plans. The argument was that brokers were highly qualified to provide guidance on what the best plans would be for their clients. But little was said about how insurers might  find ways to use the brokers to to their own advantage.

As this article shows, insurers can heavily influence broker behavior through the commissions they grant. The insurers found that people who were signed up during special enrollment periods had greater health care needs and also were more likely to drop out after their needs were met. That’s easy. The insurers stopped paying commissions for most of the plans sold during these special enrollment periods. Also, people enrolling in gold plans, with their higher actuarial values (covered more of the costs), were also using more health care. Again, no problem. Many insurers quit paying commissions for gold plans but continued to pay them for lower actuarial value plans that required patients to pick up more of the costs of health care. Will the broker sell plans without a commission, when an insurer offers a commission for selling their more profitable plans?

Discrimination in the offering of private insurance plans is prohibited, but AHIP - the insurance lobby - says that insurers are not discriminating but rather are merely adjusting to market realities. Clare Krusing - AHIP’s spokesperson - said that there was no way “to offer the kind of coverage as they had in the past (gold or platinum plans) without sustaining huge losses.” It really is about profits, not patients.

And now many politicians and progressive pundits are telling us to build on Obamacare. Forget about single payer because it will “never, ever come to pass.” Instead let’s control costs through higher deductibles and other cost sharing, narrower networks, greater administrative hassles through ACOs and EHRs that keep professionals from tending to their patients, more opaque obstructions that keep sicker patients out of the private plans, more managed care that reduces access, especially to specialized services, *** **** ****, ***** ** ****, and ** ****** *****.

And those asterisks? They are the hidden future policies of the insurers that will further enhance their business models - policies that we can’t even conceive of since they can only be conjured up by the nefarious minds that are currently in control of our health care financing system. Do we really have to have a health care future that will eventually reveal to us what is behind the magic asterisks? Or shall we tell them on their way out the door where to put their asterisks, as we take over and set up our own single payer national health program?