Reality #7 – Health Insurance Agents in Limbo

Many health insurance agents fear the loss of their livelihood once government health insurance Exchanges are created and people begin to shop online. But Exchanges will not be simple. Thus, Obamacare established a new entity called “navigators” to assist individuals and businesses in buying coverage from federally-qualified health plans on the exchange. Health insurance agents will be only one of many groups allowed to become navigators.

Although health insurance companies are prohibited from being navigators, the federal law says navigators,

“may 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…”

While the proposed Minnesota legislation (SF1/HF5) allows health insurance agents to become navigators, the bill ties the definition of “navigator” directly to federal law and rules:

“‘Navigator’ has the meaning described in section 1311(i) of the federal Patient Protection and Affordable Care Act (Public Law 111-148 [PPACA]), and further defined through amendments to the act and regulations issued under the act.”

Therefore, if federal officials oust insurance agents from their definition of navigator, a position they initially held, Minnesota’s insurance agents would be ousted as well. Agents should take no comfort from sections of SF1/HF5 that allow agents to be certified and funded. The definition will rule the day. As the PPACA states, “An Exchange may not establish rules that conflict with or prevent the application of regulations promulgated by the Secretary under this subtitle.
Navigator funding differs from the commissions agents now receive from insurers. Navigators are not allowed to receive funds from any health insurer to enroll any individual using the exchange. Instead, the PPACA requires Exchanges to “establish a program under which it awards grants” to navigators, and further requires these grants to be “made from the operational funds of the Exchange and not Federal funds received by the State to establish the Exchange.”
The proposed Minnesota House File 5 (4th Engrossment) would require the Commissioner of the Minnesota Office of Management and Budget to establish compensation for Navigators and other “in-person assistors,” a term left undefined in the bill. The Exchange would pay agents accordingly.
Conflict of Interest?
Ostensibly, payment to agents from insurers would create a conflict of interest.  Yet the biggest conflict of interest is written into state and federal law: Navigators are paid by the State, which also funds and operates the Insurance Exchange.  Would it not be safe to assume that Navigators, paid by the government Exchange, would have a financial incentive to encourage people to enroll in the government Exchange as opposed to purchasing insurance on the private market? 
Coming Thursday: Reality #8