One of our clients recently told us about a health insurance plan that was being marketed to him, and we were curious enough to want to look into the situation further. In a nutshell, it’s not a discount plan, not a mini-med, and not a traditional limited-benefit indemnity plan. All of those plans should be avoided in general, and the ACA has sort of skirted around them a bit: numerous mini-meds have been granted temporary waivers in order to continue to operate, discount plans aren’t addressed by the ACA at all (and aren’t regulated by most state Division of Insurance departments either, since they aren’t actually insurance), and limited benefit indemnity plans are exempted from ACA rules (although people who have them will likely have to pay a penalty for not meeting minimum benefit requirements).
Anyway, the plan that was marketed to our client resembled traditional health insurance, but was very convoluted and sold with numerous riders to cover all sorts of different scenarios. The brochure was 27 pages long and included numerous detailed examples showing how awesome the marketed coverage was when compared with “traditional major medical.” It noted that the plan isn’t subject to ACA mandates, and the policy is still being marketed with a $5 million lifetime maximum. When I spoke with an agent for the plan (a captive agent, of course – plans like that are never marketed by brokers who have access to other policies), he told me that the policy will not be guaranteed issue next year, and that they aren’t concerned about the potential penalties that their clients will have to pay starting in 2014 for not having ACA-compliant coverage. His reasoning (and the marketing pitch that they’re making to their clients) is that their premiums will be so much lower than ACA-compliant plans that their clients will save enough money to more than make up for the penalty (currently their premiums were roughly the same as those of reputable health insurance policies).
In short, everything about this policy sounded sketchy.
A rather lengthy Google search didn’t bring up much in the way of regulations pertaining to this sort of issue. I remembered my efforts in the fall of 2011 to get specific details about regulations regarding mini-meds… and I wasn’t encouraged. At the time, the Colorado Division of Insurance wasn’t aware of a solution to the problem our client was facing (although to give them credit, I was able to speak with someone as soon as I called them). They referred me to HHS, where I had to leave a voice mail. The outgoing message said that someone would get back to me within five business days, but that was a year and a half ago and I’m not holding my breath for a reply. I also left a message for the National Association of Insurance Commissioners (NAIC) about the issue and never heard back from anyone there. We ended up getting the client onto an Anthem Blue Cross Blue Shield plan, but we never heard back from any of the government agencies we contacted regarding his mini-med situation.
So back to our current questions about the sketchy-sounding health insurance being marketed to our client. I contacted HealthCare.gov via Twitter but got no response. I called the Colorado Division of Insurance and was told that I should send in an email with the specifics. I did that on Wednesday and haven’t heard anything back from them yet. I called them this morning to follow up, and they told me that they had received my email but didn’t know to whom it had been assigned yet – this is two days after I sent it, so I would assume that perhaps the employees there are overworked and understaffed. I didn’t contact the national HHS office again, because I didn’t feel like wasting my time any further. However, I did send an email on Friday morning to the regional HHS office in Denver, so hopefully I’ll hear back from them sometime soon.
I’m also hopeful that I’ll hear back from the Colorado DOI sometime next week. They usually end up being a helpful – and local – resource, even if we have to wait a few days. Once we get some more information, I’ll write a follow-up post about how an individual carrier is apparently able to operate entirely outside the regulations of the ACA.
But for now, I’m struck by how difficult it can be to obtain information from a government agency, or even speak with a real person as opposed to just leaving a message or sending an email that may or may not ever get read. I know that private companies aren’t always shining examples of customer service, but I can’t imagine calling the claims or customer service number on the back of our Anthem Blue Cross Blue Shield card and being told to leave a message and that someone would get back to me within five days. When we contact our local credit union, someone helps us right away. When we need assistance on our home or auto insurance policies, our American Family agent always get back to us the same day we contact him, usually within just a few hours.
And that brings us to the health insurance marketplaces (aka exchanges) that will be up and running in the fall. I’ve pointed out before that a large part of what they will provide is a duplication of the services that brokers with an online presence have been offering for years (Insurance Shoppers has been online since 2003, providing no-cost advice and comparison of all of the major individual health insurance plans in Colorado). The major difference of course, is that the exchanges will also be a place where people can determine eligibility for, and obtain, subsidies to help pay for health insurance.
Those subsidies will be a crucial element once individual health insurance becomes guaranteed issue next year, as premiums will probably rise in response to the higher claims costs associated with guaranteed issue coverage. So it’s essential that we have a platform for making sure that people are getting the subsidies for which they are eligible. But I have to wonder how the rest of the health insurance marketplace setup will compare with the services that have been offered for years by independent brokers. When a client calls our office, they either get Jay on the phone or they leave a message and he calls them back right away – the idea of waiting several days to respond to a client would be ludicrous. Same goes for email; we respond to those right away too. I would say this is the case for most independent brokers, as competition and a desire to satisfy (and thus retain) clients pushes most of us to provide the best service possible.
That element won’t be part of the marketplaces though. Each state will have one marketplace, and that will be the only place where people can obtain subsidized health insurance. I’m not saying that the marketplace employees won’t try to provide great customer service or that they will fall short of what’s offered in the private market, but there simply won’t be the extra motivation and inherent drive that comes when significant market competition is involved. Everyone will know that people who qualify for subsidies to help pay for their health insurance will simply have no other option in terms of where they purchase their coverage. If it takes a few days for a representative to get back to the client, so be it – the client isn’t going anywhere else. That’s never the case in the private market. Every client has to be given VIP treatment, because every broker knows that every client has many other options that are available at the click of a mouse.
My experiences over the years with trying to obtain information from government agencies in the health insurance arena has possibly jaded me a bit, but I do have concerns about the fact that the marketplace will essentially be a government agency with a captive audience (anyone who qualifies for a subsidy for their health insurance). The marketplaces will have to compete with independent brokerage when it comes to clients who earn more than 400% of FPL and are not eligible for subsidies, but for clients who do qualify for a subsidy, there will be no market forces or competition driving the marketplaces. I have no doubt that the employees who end up working at the marketplaces will have the best of intentions and will do the best they can for the people they are helping. But as much as I try to be optimistic about it, I can imagine it ending up like the DMV or the IRS when it comes to customer service.
I’m not simply bashing government agencies (I know that a lot of them are absolutely essential) and I understand that the ACA largely relies on private industry to expand health insurance coverage. When I hear people – like the captive agent I spoke with about the sketchy health insurance plan described above – talk about the “government plan” that people are going to have for their health insurance next year, I roll my eyes the same way everyone who’s educated about the ACA does (there is no “government plan” that will be offering health insurance other than the already-existing Medicare, Medicaid, and CHP+ programs). But the marketplace will essentially be a government agency, even though the plans it will be selling will be private health insurance. And while I’m hopeful that the marketplaces can avoid the lackluster customer service experience that we often get at other government agencies, it remains to be seen whether that will be the case.