ACA Sign-Ups for Low-Income People Roll Out Amid Brokers’ Concerns About Losing Their Cut

Insurance agent Cindy Holtzman was a little surprised by the notice from Bright HealthCare, one of the insurers that offer Affordable Care Act coverage in her area.

The company’s February note said its health plan sign-ups saw “extraordinary growth” — passing the “one-million-member mark” in the previous year — and tied that success to the good relationships it has with brokers. But, the note continued, the insurer wanted to “suspend growth during this special enrollment season” and thus would stop paying commissions to brokers who enroll new people in coverage starting April 1.

“Why sell something I don’t get paid for?” the Georgia-based Holtzman recalled thinking.

Bright Health is not the only company cutting commissions. Several other insurers, including Oscar, Molina Healthcare, and some Blue Cross Blue Shield plans, have taken similar steps recently — just as the Biden administration rolls out a new ACA special enrollment option aimed at signing up low-income Americans into ACA coverage outside of the usual annual open period. The new sign-up program became available in mid-March for coverage starting at the beginning of April.

The insurance industry’s trade group, however, opposed the plan, saying that people who sign up outside of the end-of-the-year enrollment window tend to be sicker, drive up the price of insurance, and cost insurers more.

“We have significant concerns it would create instability in the individual market and result in higher premiums for all enrollees,” AHIP wrote in a July comment letter to federal agencies.

Consumers could, insurers warn, wait until they get sick to enroll or switch plans to one with more generous benefits. The Centers for Medicare & Medicaid Services estimates that the low-income special enrollment program could increase premiums by 0.5% to 2% annually because of sicker enrollees.

Special enrollment periods have always been allowed under the ACA when triggered by certain life events. Everyone else signs up during the annual open enrollment, typically from November to January. That restriction is designed to reduce the incentive for people to wait until they fall ill to buy insurance, which likely would drive up premium costs for everyone.

Last year, the Biden administration added a six-month covid-related special enrollment, which resulted in a record 2.8 million sign-ups.

Still, “there is limited data on whether folks come in sicker” during the special enrollment periods that have occurred since the ACA began, said Katie Keith, a researcher at the Center on Health Insurance Reforms at Georgetown University, adding that some of the verification rules supported by the industry around previous special enrollment exceptions are onerous enough that they may discourage the healthy more than the ill. Brokers note that low-income customers do turn to brokers when considering insurance coverage.

“Those are people who often need help the most,” said Marcy Buckner, senior vice president for government affairs at the National Association of Health Underwriters, an industry trade and lobbying group. “Agents and brokers want to help consumers, but they also have to keep their doors open. If they’re not earning commissions, they may not be able to help those consumers.”

The move by some insurers to cut commissions as of April 1 has caught the attention not only of brokers but of federal regulators.

“We are concerned about the impact on consumers, particularly those consumers whose circumstances lead them to enroll mid-year, and are actively investigating this matter,” Ellen Montz, director of the Center for Consumer Information and Insurance Oversight at CMS, said in a statement.

The Biden administration program allows people who earn less than 150% of the federal poverty level — about $19,320 for a single person or $32,940 for a family of three — to sign up anytime during the year. Other special enrollment offers, such as those for people who lose job-based insurance, get married or divorced, or want to add a baby to their plans, are generally time-limited. Among those currently uninsured, an estimated 1.3 million could be eligible for the new low-income enrollment option.

Many more might need help enrolling soon for another reason, said policy experts. Some estimate that millions of people could lose Medicaid coverage once the official pandemic emergency ends because states will no longer be held to an agreement they made with the federal government not to drop enrollees during the pandemic.

Although many of those health consumers might enroll on their own through federal or state marketplaces, or seek help from federal grant-funded assisters, experts say some may turn to private brokers, who may not want to take on new customers if they’re not going to get paid for their time.

“If insurers are not paying commissions for the special enrollment period, that will diminish sign-ups,” said Sarah Lueck, vice president for health policy at the Center on Budget and Policy Priorities, a left-leaning think tank in Washington, D.C.

Agents and brokers also argue that changing commissions midyear might run afoul of federal or state rules barring discrimination.

They point to CMS guidance issued in 2016, when some insurers were changing commission structures, warning the industry against practices that had the effect of “discouraging the enrollment of individuals with significant health needs in health insurance coverage.”

Neither Oscar nor Molina would comment for this story. In a written statement, Bright HealthCare said the industry is trying “to ensure continued access to care at affordable prices,” and is “working closely with its brokers to implement the [special enrollment period] commissions change as part of the solution.”

The Biden administration’s new policy for low-income special enrollment automatically applies to the 30 states using the federal health exchange; the remainder that run their own marketplaces have the choice of whether to offer it. Excluded are people eligible for Medicaid or who have job-based coverage that meets the ACA’s criteria as affordable.

While the new special enrollment period is considered permanent, eligibility is tied to the increased subsidies made available through the American Rescue Plan Act to help people buy coverage, which expire at the end of 2022 unless Congress extends them.

Insurers recently have expressed concerns about costlier customers enrolling during special periods, with some blaming higher costs toward the end of last year on new enrollment.

Some of those cutting commissions, however, such as Molina, still posted profits last year.

But not all. Oscar, for example, posted a 49% jump in membership during 2021, but a net loss of $571 million. Bright Health Group, Bright HealthCare’s parent company, also showed membership growth last year, but with a net loss of more than a billion dollars.

Brokers say federal statistics recently shared with them found that close to half of all sign-ups during special enrollment periods were aided by brokers.

Insurers should not credit brokers on one hand for their tremendous growth and then cut their pay, said Ronnell Nolan, president and CEO of Health Agents for America, a professional and advocacy group for brokers.

“They can always point to how they are losing money. I always say, ‘Let’s check top management’s income’ and, guess what, it’s not zero,” Nolan said. “If they are not doing a good job in their financials, that’s not my job. We are doing our jobs.”

Commissions are paid by the insurers, so consumers who use a broker don’t pay more than those who do not. Still, commissions are baked into premiums overall, potentially raising prices across the board, and some policy experts question whether commissions lead agents to push certain plans over others.

Unlike brokers, government-funded navigators do not earn a commission, and they cannot suggest a specific plan for clients.

“We help them filter through the plans, which can be overwhelming,” said Jodi Ray, director of the nonprofit Florida Covering Kids & Families, one of about 60 Navigator programs operating in 30 states.

Navigator programs got a boost this year when the Biden administration significantly increased funding above the levels paid during the Trump administration.

So, Ray is not worried about having enough staffers to help people with the new low-income enrollment or the expected wave of former Medicaid patients who may lose their Medicaid eligibility once the pandemic emergency ends.

Instead, she’s concerned “about whether the state is willing to let people know where they can get that free help.”

Julie Appleby:
jappleby@kff.org,
@Julie_Appleby