Jim Borah, president of the Rhode Island Business Healthcare Advisors Council, is senior benefits adviser at The Cornerstone Group in Providence. He has worked with small to large companies in developing, implementing, and maintaining health benefit plans for twenty years. He served on the R.I. Health Benefits Exchange Expert Advisory Committee.
PBN: Are you selling more policies directly to individuals and families as a result of the Affordable Care Act (ACA)?
BORAH: In Rhode Island, advisers are not compensated for selling individual policies so we are not involved in selling to anyone except corporate clients. We do, however, see some activity within our small group clientele towards moving away from employer-sponsored health insurance and just letting individuals purchase through HealthSource RI (HSRI). At this point, the movement is minimal and, for the most part, not beneficial to employees. However, we will be monitoring this option as the year progresses.
PBN: What pressures has the ACA put on insurance brokers?
BORAH: The ACA is making us work harder and provide better service to our clients. The insurance piece is considerably more involved as we not only need to explain HSRI and its “defined contribution” model but also the changes to the rating formulas mean we are actually delivering individual rates wrapped into composite pricing for employers. Whereas previously we have only needed basic census information on individual employees, we now require dates of birth on spouses and children as these factors are all necessary to formulate rates.
Beyond the actual insurance rates and plan designs, the ACA imposes significant compliance-related issues for companies that sponsor benefit plans. Plan sponsors are required to distribute a host of forms and notices to employees. RIBHAC members typically provide full-service consulting services to clients as a means of distinguishing services from the traditional insurance broker who is more concerned with just delivering insurance rates. Ultimately, the ACA will contribute to the evolution of the industry from an insurance-centric broker to a full-service advisor.
PBN: What aspects of the rollout of the ACA have you been most surprised by?
BORAH: While I knew the changes to the rating methodology (no more gender-based underwriting, consideration of all family demographic factors and a reduction in the largest differential assessed against an older vs. younger employee from 4-1 down to 3-1) would promote winners and losers, I was not completely prepared for the actual impact these changes would have when delivering rates to groups. We now are able to provide rates for each employee and employers actually have the ability to charge different rates based on age and family size. Essentially, the rates are much more transparent to employers then they have been previously. Additionally, we have previously been able to deliver guaranteed rates for a plan year to employers. Now, however, since the rates are individual-based, we need to explain to employers who want to deliver a single group rate to employees that the rates will change as employees come on or off the plan during the year. These concepts represent significant change to employers.
PBN: Do brokers sometimes guide clients they’ve had for years through HealthSourceRI.gov as a paid service?
BORAH: We are paid for business that goes through HSRI just as we are paid for business that is placed directly with the carriers. Thus, I am not aware of anyone charging fees on top of the standard commissions. HSRI has gone to great lengths to work with us and we are very grateful for the outreach by HSRI Executive Director Christie Ferguson. She recognizes that we are part of the solution and are essential to driving volume into HSRI. The “defined contribution” model within HSRI allows for individuals within a single company to select from three insurers and sixteen plans. Our work when placing business within HSRI is considerably more involved as the actual insurance decision moves from the Executive Suite down to the employee level. Thus, we need to sit down with each individual employee and walk through the plan options and pricing.
PBN: What is the tone of private conversations among brokers regarding the Affordable Care Act today versus one year ago?
BORAH: I think those of us in the business have generally looked at the ACA a bit skeptically. While we understand the need to fix a system that is overly expensive, we are not convinced that the ACA is the solution. If we look at some of the market reforms that were necessary nationally (elimination of pre-existing conditions, prohibition of rescissions), they have been the law in RI for some time and we are supportive. Most of us also work in the Massachusetts market and have seen the success of the 2006 state law there, reduction in the number of uninsured, as well as the failure, the inability to control premium costs. We don’t really see how the ACA is going to reduce costs and, in fact, we already are seeing about a 4 percent cost increase to employers as a result of ACA-related fees. The law will ultimately be judged on its ability to rein in costs while improving health outcomes; very lofty goals given the complexity of the health care system.