Health Care Reform Requires Agents to Develop a Direct Relationship with Each Employee

Until recently, employer health benefits meant a single group policy covering each employee and their dependents with the same benefits. Today, more and more employers are allowing employees to choose their own individual or family policy and pay for it with pre-tax defined contributions and/or pre-tax salary reductions.

“The fire of employers switching from group policies to employer-funded individual policies started before 2010,” says economist Paul Zane Pilzer, author of The New Health Insurance Solution, “But then along came health care reform which has had the effect of pouring gasoline on this fire.”

This is especially true in the small employer group market, says Pilzer, where several insurance companies have strategically chosen to exit the small group market and increase sales in the individual market.

“Insurance companies in the small employer group market were trapped between a rock and a hard place, stuck between rising medical costs and state limits such as rating bands on small group premiums. Now,” says Pilzer, “insurance carriers can retain customers by switching them to more profitable individual policies funded by employer-sponsored defined contribution health plans.”

The premium rates on individual plans are regulated differently in most states, and, unlike group plans, private carriers are allowed to reject high-risk employees with medical problems. However, new regulations require states to provide guaranteed coverage (at higher rates) for employees with medical problems that were formerly covered by a terminated group plan. Additionally, a new temporary federal risk pool, PCIP, has been created for the individuals who do not qualify for guaranteed-issue individual plans in their state. 

Click here to read the full press release.

I had a great time participating in the June 24th webinar: How Health Insurance Agents Can Thrive Under Health Care Reform.

The best part for me was hearing your comments and taking your questions. It’s clear that our industry will thrive, however, it is also clear that only agents who can transition to new services will remain.

Many of you have emailed since June 24 with specific questions and concerns. I’m sorry I can’t address them all personally, but I plan to cover all of them in an encore webinar presentation on August 3rd, 2010.  Click here to reserve your spot.

Please sign up soon as space is limited.

Thanks so much.

Professor Paul Zane Pilzer wrote a great article on his personal blog, regarding elected officials and government-supplied coverage.  With Professor Pilzer's permission, I have provided the post below.  Enjoy.

Getting rid of officials who insist on keeping their government-supplied coverage is mandatory for long-term health insurance reform. 

Friday, October 30th, 2009

Despite everything going on now in Washington, health insurance is, and will probably remain, governed by the individual states. 

The only long-term solution is to get state representatives in every state subject to their own regulations--so they are on our side of the table on this critical issue. 

Next year legislators in most U.S. states are up for re-election. You should contact your local representative now and ask them to sponsor a bill doing exactly this--give each state legislator a tax-free allowance to purchase their own health insurance, just like their constituents do. 

If your representative doesn't agree, find another candidate to support, or consider running for office yourself. I believe this issue -- making legislators subject to their own health insurance regulations -- will be a litmus test for successful candidates in 2010. 

Are you interested? Below is my editorial on this subject that will appear next month in the November 2009 issue of UtahCEO magazine. 


______________________________________________________________________

From UtahCEO Magazine, November 2009
http://www.utahceomagazine.com/article.php?id=409 

Utah Health Insurance Reform 

It’s time to make our elected officials subject to their own regulations. 

Our highways, restaurants and airports function as well as they do because all of us — poor and rich alike — drive on the same roads, eat at the same establishments and fly on the same planes. Making our politicians and government officials mortal when it comes to health insurance is the only way to ensure a long-term, permanent fix to our current health care crisis.

by Paul Zane Pilzer 

One of the primary reasons Utah has a problem providing its citizens with affordable healthcare is that our 104 elected senators and representatives receive lifetime, state-supplied, taxpayer-paid health insurance. 

As we head toward the next election, each Utah voter should pledge to vote against any state representative who refuses to support legislation making our elected representatives and their families the same as ordinary citizens when it comes to their health insurance. 


Utah legislators are part-time state employees who work only the few months each year when the legislature is in session, yet they receive generous state-provided health benefits for themselves and their families at an annual cost to taxpayers of approximately $12,000 per elected official. Moreover, representatives who serve for 10 years or more can keep these benefits for life.

Instead, the state of Utah should simply give each legislator a $12,000 annual tax-free allowance to purchase his or her own personal health insurance, or to pay the cost of participating in their employer’s group plan, just as ordinary citizens do. This is not intended to punish our elected officials — it is designed to get them working to improve access to health insurance for every Utah resident.

In February 2009 a bill was introduced by Rep. Eric Hutchings (R-UT 38th District) to do exactly this. However, it was quickly killed by the House leadership, which realized that if the bill reached the floor, no legislator who voted against it would get re-elected. 

The need to make our legislators “mortals” subject to their own regulations is more critical than most people realize. For example, Utah, like most states, has a federally-mandated program called HIPUtah that provides its unhealthy citizens with state-guaranteed personal health policies at 2-3 times the cost of normal health insurance. Despite its high cost, HIPUtah can be a lifesaver — for example, to a family with no employer-provided health benefits that has a child with leukemia. More than 50 percent of Utah’s small employers do not offer health benefits to their employees.

In 2009, to help such families with the tremendous financial burden of HIPUtah-type coverage, the federal government began allowing employees to pay for such coverage through pre-tax salary adjustments and/or tax-free reimbursements from their employer. Incredible as it may seem, in 2009 the Utah legislature mandated the cancellation of HIPUtah coverage for any Utah citizen who accepts even one penny of employer contribution toward their HIPUtah coverage — even though Utah employees, as U.S. citizens, are allowed to accept such contributions under new federal regulations. 

The sponsor of this reprehensible mandate was Rep. James A. Dunnigan (R–UT, 39th District), a health insurance agent with a reputation for being a “bought and paid for” representative for health insurance special interests. Rep. Dunnigan needn’t be concerned bout the cost of his own daughter getting leukemia because he and his family receive virtually unlimited health coverage, tax-free, as a state representative. 

Repealing the Dunnigan legislation is but one of hundreds of ways we could be improving healthcare for every Utah resident, if we could get our elected officials to drive on the same “health highways” that the rest of us must use. 

Our highways, restaurants and airports function as well as they do because all of us — poor and rich alike — drive on the same roads, eat at the same establishments and fly on the same planes. When a highway is in need of repair, when a restaurant serves tainted food or when an airport closes down, our politicians immediately use their connections to get the problem fixed. Making our politicians and government officials mortal when it comes to health insurance is the only way to ensure a long-term, permanent fix to our current health care crisis.

Moreover, Utah has an unprecedented opportunity to lead the nation in this noble quest. Once passed here in Utah, our great state would become the model for other states, and for the federal government, to make all elected officials subject to their own regulations when it comes to health insurance. 

Paul Zane Pilzer is a former economic advisor in two White House administrations, the author of nine bestselling books, and the founder of several Utah-based companies. For more information visit www.paulzanepilzer.com. 


Comment by Professor Pilzer on 10/31/09:

"Right after I posted this article, I learned that H.R. 615 was introduced which makes all members of Congress subject to their own health care legislation. 

Everyone should sign the petition supporting this resolution, and/or email their representatives and senators demanding that they make themselves subject to their own health insurance reforms. 

You can learn more about H.R. 615 and sign the petition at 
http://fleming.house.gov/index.html and at 
http://fleming.house.gov/index.html

DISCLOSURE: I do not personally know Rep. John Fleming and do not generally support individual politicians--I am recommending we all support H.R. 615."