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Llew Boyd, Nikki Patillo and Ben Johnson, from left, work at American Exchange.

As a fifth generation insurance broker, selling insurance is in Bobby Huffaker's DNA.

The 26-year-old Chattanoogan thought he would join his father's business selling health plans to area employers after earning his degree in risk management at Ole Miss. But when Congress adopted Obamacare in 2010 as he was picking up his college diploma, Huffaker saw a new insurance market opening up in the individual market.

After a couple of years of planning and the re-election of Obama to ensure health care reform would be implemented, Huffaker joined with a veteran insurance broker and call center manager, David Yoder, to launch American Exchange last year.

"I saw that a lot of small businesses couldn't afford insurance any more and the individual market is much more competitive with the tax subsidies being provided through the Affordable Care Act," Huffaker said. "There's a tremendous market opportunity here that we're trying to help meet."

Despite the controversy over Obamacare and initial website problems that prevented most people from finding out about the new health care exchange plans, American Exchange has signed up more than 1,100 people in private health plans across the country over the past five months. The company continues to get more than 100 applications a week.

From its call center on the second floor of the Loveman's building in downtown Chattanooga, 28 brokers and call agents patiently help individual callers review their options under the new health care exchanges or talk with small businesses about new insurance alternatives available under the Affordable Care Act.

Operators typically take an hour or more talking to prospective customers, but Yoder said the extra time spent on the front-end is yielding higher sign-up and satisfaction ratings.

American Exchange has partnered with Liberty Tax offices nationwide and Erlanger and Hutcheson hospitals locally for referrals to their call lines.

With its web-based sign-up plan, Obamacare enthusiasts hoped that millions of Americans would use the government's website,, to choose and enroll in one of the new health plans that best met their own needs.

But the website initially couldn't handle the number of people requesting information when it debuted last fall. Even after technical problems were corrected, many individuals were confused by the dizzying array of choices they faced in deciding which plan to join.

Yoder, a 42-year-old former United Healthcare manager who previously headed a call center handling Medicare plans, knew from his experience with Medicare changes adopted a decade ago that many people wanted help choosing the best health plan with their doctors in the network.

Rachel Cullor, a former Convergys operator who joined American Exchange last year, said she often has callers crying with joy when they find out they can afford to buy health insurance.

"We're able to help a lot of people get insurance they weren't previously able to afford," she said. "There are a lot of people who want some help figuring out what best works for them, and when you walk them through the options and see some of the subsidies that they qualify to get, many are pleasantly surprised."

As a broker, American Exchange is paid by the insurer -- typically about $15 a month per member -- when it enrolls a new customer. Enrollees don't pay any more to sign up through the broker and they get the advantage of someone to help walk them through their options and recommend the best plan.

Startup woes

The startup of American Exchange has required long hours and fewer signups than what Yoder and Huffaker expected going into the venture. Last-minute changes from the Obama administration meant working on Christmas Eve and shifting work schedules and staffing in response to changing regulations.

But the entrepreneurs remain hopeful of turning a profit from American Exchange this year and building a new type of insurance broker model for the changing market.

Huffaker and Yoder decided against commission income for those staffing the phone lines. They pride themselves on allowing their call agents to spend the time to help clients find the right plan. That reduces the number of repeat calls and boosts referral business, which now accounts for 30 percent of American Exchange's calls.

Yoder said American Exchange will continue to focus primarily on the individual market for the next month until the open enrollment for the first year of the new health care exchanges ends on April 1.

Yoder sees even more opportunity working with many small employers by taking over their health care coverage for workers through a patented product American Exchange developed known as the Personal Health Account. The PHA, like a Health Savings Account (HSA), gives members a credit card to pay medical expenses, although such payments are not tax-advantaged like HSA accounts.

Employers with enough employees will have to pay a penalty starting in 2016 if they don't offer their workers health insuranc.

But Yoder still expects many still will be better off paying the penalty and giving their workers money to buy coverage through individual health exchange plans. The PHA allows employers to easily put money into their workers account to help cover such expenses.

"With the subsidies and other advantages of the new individual plans, that will be a cheaper alternative for many businesses," Yoder said.

Scaling up

Broker reimbursements are lower than in the past so the traditional face-to-face model of selling with appointments isn't well suited for the new marketplace.

"We knew we needed to be able to sign up people over the phone and we knew we needed to scale up to get the volume needed to keep on cost-per-customer down," Yoder said.

That's where the venture capital program, the Lamp Post Group, helped American Exchange by providing capital, advice and office space for the startup venture to take root. American Exchange was birthed in the Lamp Post venture lab and its offices remain just across the hall from Lamp Post.

"That's been a tremendous help in not only giving us startup capital and expertise, but in handling our payroll and accounting to help us focus on what we do best," Yoder said.

Huffaker says he hasn't taken any time off since the business launched in January 2013.

"We're going to make this work -- and then I'm going to take a nice long vacation," he quipped.

Contact Dave Flessner at or at 757-6340.