If you ever squirm through the seeping underbelly of dastardly health insurance tactics like we do here at KBGH, you may have seen this report from The Hill last week outlining some alleged underhanded tactics being used by health insurance brokers.
The tl;dr (too long; didn’t read) version of the story is that the Government Accountability Office (GAO) performed an undercover audit of insurance brokers to determine if companies selling health plans exempt from the Affordable Care Act coverage requirements were being honest about the limitations of those plans. After all, ACA non-compliant plans tend to be cheaper, but they also tend not to cover preexisting conditions.
Out of 31 undercover phone calls to representatives in Alabama, Florida, Kansas, Pennsylvania, and Wyoming, during which GAO agents posed as customers looking for health insurance that covered their preexisting conditions like diabetes or cancer, about a quarter of the time (eight calls) sales representatives engaged in “potentially deceptive marketing practices.” Examples included:
Representatives telling the undercover agents that preexisting conditions would be covered, even when the agents claimed conditions that were explicitly excluded by the plan in question.
Representatives refusing to provide documentation of coverage prior to enrollment.
Representatives implying or asserting that the customer was being enrolled in a comprehensive insurance plan rather than, for example, a health care sharing ministry or membership in an association with a bundle of limited benefit plans.
Representatives suggesting that no other coverage was available.
Representatives intentionally falsifying the caller’s health status on the application.
Examples of call recordings are available online.
In spite of its shades of its Dateline NBC-esque qualities, this doesn’t seem to have been a showy, “gotcha” operation. The investigation was requested by Democratic senators Robert P. Casey and Debbie Stabenow as a follow up on an investigative report on misleading online ads for non-ACA plans. But the GAO is a nonpartisan organization. The Hill, which reported the story, is well-known as a centrist or even center-right publication. And as Katie Kieth points out in Health Affairs, this isn’t even the first report of its kind. Many other instances of this kind of behavior have been documented.
What does this mean for you, the employer?
This news alone may not be very relevant to your company’s health coverage. After all, these agents were posing as individuals seeking a non-ACA compliant plan. If you’re in Human Resources this is very unlikely to represent your interactions with a brokerage or the greater health insurance industry. But this isn’t the first time the insurance brokerage industry has been stung recently. In early 2019 a Propublica piece showed that brokers working on commissions–usually three to six percent of the premium–routinely increased the cost of benefits to companies. This isn’t a personality flaw in the broker agents; it’s a feature of a flawed system.
To my knowledge no one has been able to mount a significant defense against these allegations. To the contrary: the 2019 Propublica piece led to senators calling for disclosure of perks and fees paid to brokers, a position enthusiastically supported by Michael Thompson, the president and CEO of the National Alliance of Healthcare Purchaser Coalitions, of which KBGH is a member.
What you can do to protect yourself
KBGH believes that brokers can be a vital part of the health insurance marketplace. Health coverage is confusing, and it is worth good money to make sure your company is getting the best value for its health care dollar. Ideally, we would like to see all brokerages work on a fee basis and take no commission off your premiums, since that commission perversely incentivizes the broker to increase your health coverage costs. To make this easy, Health Rosetta has created a “Benefits Advisor Compensation Disclosure Form” that you can download for free to use with your broker.
But at the very least, we believe in transparency. Your broker should be able to disclose all the ways it is making money off its work with you up front. If your broker refuses to do that, we recommend that you find a new broker.
As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on topics that might affect employers or employees. This was a reprint of a blog post from KBGH.