By HEATHER CHAMBERS
Some of the state’s largest health insurers have sent warning letters to brokers who sell their policies cautioning them that if they combine some products they could be denied a commission, or worse, kicked out of their network.
Brokers familiar with the matter say they’re being asked to sign statements saying they will not combine some high-deductible plans with other forms of insurance that cover the deductible.
“They’re actually saying we’ll cancel your appointment; we won’t pay you,” said one broker who spoke on the condition of anonymity.
Several carriers, including Anthem Blue Cross, Blue Shield of California, Health Net Inc. and Kaiser Permanente, have sent warning letters to insurance brokers threatening to terminate their contracts or withhold commissions if they sell the so-called “wraparound” plans to employers.
Health plan administrators argue that their bundling tactics actually encourage overuse because workers have less incentive to be careful with the insurance money. Brokers complain that insurers are restricting them from devising new ways to save employers money.
“Most employers are unaware insurance companies are trying to block these plans because their agent won’t tell them,” said Mark Reynolds, chief executive of Visalia-based Ben-e-lect, a flexible benefits program that sells wraparound plans to businesses and has partnered with more than 30 chambers of commerce. “The brokers are put in the middle of this.”
Commissioner Inquiry
The office of state Insurance Commissioner Steve Poizner began looking into the issue after media reports about the warning letters surfaced recently. In August, Blue Shield of California reportedly fired an insurance broker for enrolling a small-business employer in a $3,000 deductible plan, presumably with another form of financing to help workers with their deductibles.
Jason Kimbrough, a spokesman with Poizner’s office, said the commissioner has looked into the issue without launching an investigation.
Carriers refused to comment on the issue, citing confidentiality reasons.
The firing of broker Bill Goldstein raises questions of legality and contractual obligations between a broker and a health plan. A legal opinion issued Oct. 1 by the insurance commissioner found that small business employers were acting legally in covering employee deductibles, although the opinion did not address the issue of contractual relationships between brokers and carriers.
“We still are not stepping into the contractual language between a health insurer and broker,” Kimbrough said.
At a time when many businesses are busy crafting benefit plans for 2009, the question becomes whether other carriers will deny commissions or end relationships with brokers who bundle plans.
As the presidential candidates debate the reforms needed to change current healthcare systems, employers are grappling with rising premiums at a time when the economy has offered little financial relief.
Instead of dropping coverage altogether, many small businesses have opted for health plans that ask employees to pay high deductibles and out-of-pocket expenses.
“Everybody is looking for a solution because nobody can afford the premium,” said Mike Cully, president and chief executive of the 977-member San Diego East County Chamber of Commerce. “It’s simply devastating.”
Cully said the issue of affordable healthcare is a recurrent one, especially because nearly 90% of the chamber’s members represent companies that employ two to 19 people.
By 2012, employees will pay an average of about $9,000 in yearly out-of-pocket healthcare expenses as premiums rise, according to estimates by the National Coalition on Health Care, a nonpartisan policy group in Washington, D.C., that advocates healthcare reform.
Two studies published last month, conducted by the Kaiser Family Foundation and the Center for Studying Health System Change, underscored the impact of increasingly high medical costs on working Americans.
The Kaiser study found that employees are paying an average of $3,354 in premiums for family coverage, twice the amount paid in 1999. Total cost for family coverage averages $12,680 a year, up 5% from last year.
In the study by the nonpartisan Center for Studying Health System Change, funded by the nonprofit research organization Common-wealth Fund, almost one of every five families said they had trouble paying medical bills in 2007.
Chambers is a staff writer for the San Diego Business Journal.
