Despite GOP calls for repeal or overhaul of the federal health reform law that passed last year, Tennessee state officials are moving full speed ahead with plans to create a state-run health insurance exchange -- just in case.
Repealing the legislation, or blocking funding for it, will be "easier said than done," said Brian Haile, director of insurance exchange planning in the state Department of Finance and Administration, which is tasked with creating the state's exchange.
"I'm really glad our motto is 'Be prepared,' because we may just really have to do this," said Haile, speaking Wednesday to insurance brokers at a Chattanooga Association of Health Underwriters' meeting.
With the emphatic disclaimer that he is not defending health reform, Haile described a number of the law's implications for insurance agents and left open a number of questions yet to be addressed by federal officials.
Though states can choose to let the federal government set up their state's insurance plan, most states will likely opt to develop their own, customizing the exchange for local insurance markets, Haile said.
Gov.-elect Bill Haslam is expected to make a recommendation to state legislators by the spring about whether Tennessee should move forward with exchange planning, or leave it to the feds, he said.
Confusion and worry reign among insurance brokers, who fear their role of helping individuals and employers develop and buy insurance plans may be supplanted by the exchanges and other reform provisions.
"Brokers and agents look at it as a disruption of their career, or an end-of-the-road of their career," said Darren Thompson of Thompson Risk Management in Chattanooga. But he said brokers can play a vital role in the exchanges. Thompson is one of 20 brokers on a committee to advise state officials on the insurance exchange planning.
"Ultimately what's going to happen is when you can get an affordable product with the state of Tennessee's insurance exchange ... it will be very popular," he said. "This is not such a bad thing."
WHAT IS AN INSURANCE EXCHANGE?
The state-run health insurance exchanges described under health care reform will be a marketplace for consumers -- small groups and individuals who do not get insurance through their employer -- to purchase one of a number of health plans. The plans offered in the exchange must meet still undefined "minimum essential benefits standards" set by the federal government.
Haile emphasized professional brokers will be needed in the coming years. The exchanges will operate a consumer assistance program, but that won't displace brokers who already have important relationships with consumers, he said.
Many brokers are also concerned that insurers, facing new restrictions on how they spend their premium revenues, will look to cut out brokers' commissions.
broker livelihoods stalked
Starting this month, health insurers must spend at least 80 percent of premiums collected on paying medical claims for individual and small group plans. For large groups, 85 percent of premium dollars must go to health care, versus administrative costs and profit.
That's already become a problem for broker Ken Gould of Winchester, Tenn. One of the major companies he works with has already told him up front it is going to have to rework broker fees due to the new medical-loss ratio standards.
"What they're doing is cutting their commissions," he said. "Effectively, that's (an agent's) salary. You're saying, 'Take a pay cut, just keep working for me.' ... Those things are a big concern to agents."