About one-third of independent health insurance advisors are thinking about leaving the health insurance business completely, as they are spending more time enrolling people in health coverage and earning less money doing it. Meanwhile, 29 percent of health advisors said their business is worse off since the Affordable Care Act (ACA) took effect.
But at the same time, 71 percent of health advisors responded to a survey, saying that compared to the same time frame in 2013, their business was doing the same or better at the end of the last ACA open enrollment period.
Those were among the findings in the Broker Barometer Survey commissioned by the National Association of Health Underwriters (NAHU). McKinsey & Co. surveyed 1,000 NAHU members before the initial ACA open enrollment season in October 2013 and continuing through the end of the enrollment season in April 2014. The NAHU members were also interviewed during the months of July and August 2014.
In the initial survey, which took place before the first open enrollment season began, NAHU members reported their concerns about the ACA. The top misgivings surrounding the ACA included the law’s potential impact on employer-sponsored health insurance, the complexity of the law and the amount of consumer education required because of it, and the time demands placed on advisors.
But with the next open enrollment season almost here, a NAHU spokeswoman said she is getting more positive vibes from the membership.
“Our members are feeling much better going into this open enrollment season,” said Kelly Loussedes, NAHU senior vice president of public relations. “They have armed themselves with resources, and they know what to expect this time around. They’re not feeling like the sky is falling.”
As for the one-third of health advisors who are thinking about bailing, Loussedes said that NAHU’s membership numbers do not reflect an exodus from the business. “Our membership has remained level,” she said. “What we are seeing, though, is that many of our members are diversifying into areas such as property/casualty and life insurance.”
One factor that may be leading to many health advisors leaving the business is demographics. Advisors who responded to the survey said they expect to see more of their counterparts leave the business or merge with other agents. Many who are nearing retirement age are deciding that it’s the right time to exit the business. In addition, few people are entering the business.
NAHU is addressing this issue by forming a committee called the Vanguard Council, Loussedes said. “The majority of our members are in their late 40s, early 50s,” she said. “The Vanguard Council is made up of not just younger agents but also those who are creative innovators in the industry, regardless of age. Their mission is to get the younger demographic to want to become an agent.”
The Vanguard Council is putting together a social media strategy as part of its effort to make sure the health advisor is not a dying breed.
As the survey continued through open enrollment season, the answers given by the NAHU members showed that many of their fears about the ACA had come true. Among the themes emerging in the enrollment period survey findings:
» Advisors are required to do more work, but they have less time in which to do it. Survey respondents said they are spending more time educating clients about their coverage options and answering client questions than they did prior to the ACA’s enactment. Adding to the pressure on advisors is the fact that the individual enrollment cycle, which formerly extended throughout the year, is now compressed into three months.
“There has been a 300 percent increase in time spent sharing information compared to the past – about three hours per enrolled life,” one respondent said.
Loussedes said that the biggest surprise emerging from the survey results is the amount of time advisors said they must spend enrolling each client under the ACA.
“[Advisors] knew with ACA they were going to have to spend more time on educating their clients,” she said. “But I think it’s astonishing the actual amount of time it is taking per client or per life. I think on average it was somewhere between two and three hours per life, where that was certainly not the case prior to ACA. Prior to ACA, it was about an hour per client.”
» Some advisors are seeing a switch in their practice from serving the small group market to serving the individual market. Advisors who do see small groups move to the exchanges observe that these groups share common factors, including having low-wage employees, a small group size (less than 10 employees) and greater employee age (50 and older).
“We see groups under 15, especially under 10 lives, deciding to throw in the towel on offering health benefits. I haven’t seen any above 30 or 40 switch,” according to one respondent.
Loussedes said she saw this issue as especially significant for NAHU’s members.
“That is of concern because lots of times these small groups are representing low-wage employees or folks who are over 50, and so I think that is a concern of ours, just seeing this exodus of a small group going into the individual market,” she said.
» Commissions continue their downward track, with many respondents predicting that per capita compensation will become the norm.
“Most carriers have gone down in commission as far as they can go. If they go down further, who will sell them?” another respondent asked in the survey.
» Advisors are evaluating the profitability of the individual market. They are also considering the best way to serve that market or whether to continue serving the individual market at all.
“We will need to re-evaluate profitability of the individual segment and how brokers spend their time. Individual market commissions dropped by half last year, and it’s likely to continue,” another respondent reported.
As the next ACA sign-up gets closer, advisors are expressing three major concerns: rate increases, advisor workload during open enrollment season, and the number of clients who will switch plans versus the number who will automatically renew their current plan.
Of those advisors who said ACA is hurting their practice, more than half said they plan to make changes to their business in response. Those who plan to make changes said that focusing their practice on other market segments or offerings and investing in marketing were the top things they plan to do.