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The Latest News On Healthcare Reform - The Big Guys and Government Never Get Hurt.

The Healthcare Reform Shakeup Has Begun.... And we aren't even close to 2014

Have you received a renewal notice from Blue Cross about premium Increases? How about a letter saying your RX benefits have been cut back until you prove you CANNOT find a "reasonable alternative" medication? If these things are starting to happen to you, feel free to direct your negative energy at the new Healthcare reform bill, and those that voted for it. Also, know that you are not alone in the cutbacks, and be thankful it's not your hard earned income our Government just slashed. You see, here is the letter the Health Insurance Agents are getting these days....

Dear Agent,

On March 23, 2010 the Patient Protection and Affordable Care Act(PPACA) was signed into law. While we are still awaiting regulatory guidance, we already know that the individual health insurance market will be subject to a new 80% minimum loss ratio requirement. This new standard takes effect on January 1, 2011.

Although it will be some time before we learn all the rules and detail around these new requirements, we recognize that our commission schedules will need to be restructured in the future....

We know... our sales are overwhelmingly though brokers and agents and we remain committed to developing innovative solutions to keep you engaged as partners in serving our customers. We understand that many consumers would never consider buying insurance without the help of a trusted independent professional. The valuable service you provide in guiding your clients through the purchase of a complicated product will continue to be recognized and compensated.

HOWEVER, until the awaited new regulations have been formerly released and we have time to evaluate them, we cannot commit to a new compensation model...

Moving Forward:

For Association Group and individual health insurance applications written(i.e. issue date) prior to July 1, 2010, there will be no change in commission schedule.

For Association Group and individual health insurance applications written(i.e. issue date) on or after July 1, 2010, the commission schedule will remain the same through December 31, 2010. However, the new commission structure for those policies written with issue dates on or after July 1, 2010 will CHANGE effective January 1, 2011, and details of those changes will be communicated to you no later than December 1, 2010.

These changes modify your Independent Broker's Contract(IBC), your current commission schedule, and any other contract governing sales compensation.

To understand a little bit more about why this has happened to all of us, we need to dig into the numbers of the new reform bill. Specifically those aimed at "minimum loss ratios". If you are not sure what that is, I will give you a brief explanation.

Every insurance company is required to have a minimum cash reserve for the amount of insurance they supply. Those of you who own condos, or single family homes that require an HOA may be familiar with the "reserve requirements" of your HOA, and that act very similar to regulations placed on the Healthcare industry.

Using our HOA analogy, when the Healthcare Reform Bill (PPACA) was passed, the amount of the "HOA reserves" required was increased from 65% to 80%, thus reducing this "loss ratio", should an overall collapse of the insurance company occur.

As you know, money does not come from thin air. So the reason you, the middle class, are getting your healthcare cut back, and the reason the middle class agents working in Healthcare are getting their commissions slashed, is simply to make up for the regulatory difference voted into law by our current administration. It's really that simple.

That said, this is not the really scary part. What I would fear most, is NOT the increases to our premiums that are in foresight of accommodating the "loss ratio" requirements that are coming January 1, 2011. No, No. The item that should be feared the most, and that there is not ANY mention, in ANY of the letters, that sights these increases in your premiums, and decreases in commissions will go to cover the gap that will be created when insurance companies can no longer deny pre-existing condition claims.

Is this making more sense now?

Good, here is what you can do. When you get letters in the mail that say 'your benefits are being cut', or that 'your premiums are going up', please call your agent so they can share with you the amount of real income they have lost in the form of commission cuts. Misery loves company, and the two of you can have a sing along about "the times they are a changing". That said, and joking aside MIDDLE CLASS, if you really want to do something about those Health Insurance letters you will keep getting in the mail, write your Representatives who voted for this "change", and send them a letter of your own by VOTING in the November elections. Remember, all this "change" was supposed to, "help the middle class". Are you feeling helped?

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