A while back Michael Lujan, who was one of the originals working at Covered California, came to see me at the Health 2.0 office. He and his colleagues realized that the workflow for small business health insurance quotations between the carriers and the agents was broken. Yet, despite the ACA (or maybe because of it!) agents are responsible for 90% of small business health quotes.
Any small business who’s ever got a health insurance quote from an agent has likely seen a relatively incomprehensible series of prices and benefits on a PDF. And if they want to see a change, the broker has to go back to the carrier/insurer and start again.
For the past year or so LimeLight Health (working at incubator Launchpad Health) has been trying to make that an interactive process, and the result is their product Quotepad. Another really interesting niche product in our convoluted health care mess.
In ancient Athens, the philosopher Diogenes wandered the daylight markets holding a lantern, looking for what he termed, “an honest man.”
It seems since the dawn of the consumer economy that customers and buyers have traded most heavily on a single currency – trust.
Three millennia later, our financial system still hinges on the basic premise that the game is not rigged and any trusted intermediary is defined by a practitioner who puts his client’s interests ahead of his own.
Anyone responsible for procurement of healthcare may feel like a modern-day Diogenes as they wander an increasingly complex market in search of transparent partners and aligned interests. The art of managing medical costs will continue to be a zero-sum game where higher profit margins are achieved at the expense of uninformed purchasers.
It’s often in the shadowed areas of rules-based regulation and in between the fine print of complex financial arrangements that higher profits are made.
Are employers too disengaged and outmatched to manage their healthcare expenditures?
Are the myriad intermediaries that serve as their sentinels, administrators and care managers benefiting or getting hurt by our current system’s lack of transparency and its deficit of information?
When people and companies buy healthcare insurance, they usually go through a broker, a consultant, or an agent.
Agents sell insurance from one company, brokers from many companies; both make a commission—a percentage of the premium. Consultants take a fee from the client to help them set up their insurance situation, then typically turn around and hand the business to a broker or agent to handle the actual sale.
As premiums have skyrocketed, that’s been good for brokers and agents, since they get a percentage of that. As health insurance offerings have gotten both more expensive and complex, that’s been good for consultants; employers increasingly feel that they need a professional helping them sort out their choices.
How will their situation change under the looming reform—not to mention the deep reorganization that healthcare is going through at the same time? It’s a “Good News/Bad News” story.
There are five key factors here:
1. Market expansion: It’s got to be a good thing when your market gets tax credits for buying your product—let alone when everyone has to buy what you’re selling or get fined, right?
2. Less risk: One reason why people go to professionals for their insurance is that the consequences of making a mistake about what’s covered, can you get covered, or will you get kicked out “rescinded,” can be huge. If everyone can get covered for everything and you can’t get kicked out of the plan, signing up for healthcare insurance is less risky—so buyers may feel less need to involve a broker or consultant.