UnitedHealthcare, the nation’s largest health insurer, has taken its biggest step toward discouraging enrollments under the Affordable Care Act.
United said it intends to stop paying sales commissions to agents who sell the company’s health policies under the ACA, the federal insurance program that provides financial subsidies to attract uninsured people and low-income applicants.
United’s new corporate policy, emailed to insurance agents Friday, will go into effect Jan. 1 in North Carolina and most of the two dozen states where United sells ACA coverage. That means that thousands of insurance agents nationwide won’t be paid for enrolling customers in ACA policies, a process that can require several hours of consultation to compare out-of-pocket costs, drug prices and provider networks between multiple health plans.
Agents who sold a heavy volume of United policies will lose thousands of dollars a year in commissions. The surprise announcement comes on the heels of a previous decision, announced three weeks ago, to slash agent sales commissions from as high as 10 percent to 2 percent, a move that agents decried at the time as an 80-percent pay cut.
“The only time I’ve seen this before is when insurers are required by government to sell a product they do not particularly want to sell,” said Wake Forest University law professor Mark Hall. “Here, this seems consistent with an insurer that no longer wants to sell through the exchanges ... but is not allowed to withdraw immediately, so it’s pushing its commissions to zero until it’s allowed to exit.”
Agents say United’s decision puts them in an bind because they will have no incentive to steer customers to United plans, even if those plans are the best choices. Several agents said Monday that United offers some of the best-priced plans in North Carolina, where it operates in 77 counties.
“What’s troubling is this is making it difficult for people to get their plans,” said Rob Luisana, a broker with Pilot Benefits in Greensboro. “We’ve got to do what’s right for the patients.”
Luisana said his average United customer generates $420 a year in sales commission.
Minnetonka, Minn.-based United has more than a half-million people enrolled in ACA plans, and the public will still be able to enroll with United for next year on their own or through the help of a volunteer “navigator.” However, insurance agents will have to decide whether they will work for a 2 percent commission through the end of December, and work for free next year to promote United insurance products.
Last week United’s CEO Stephen Hemsley signaled that entering the ACA marketplaces was a mistake. The company in November lowered its earnings forecast, stopped marketing ACA plans and warned it might stop selling ACA coverage in 2017.
In an emailed statement, United spokeswoman Tracey Lempner said, “Our current actions are consistent with our long-stated approach to continually evaluate the dynamics of exchanges as they evolve and adjust to changes in the market accordingly.”
United’s e-memo told agents it’s ending sales commissions for ACA plans as well as for individual plans sold off the exchange. The latter are identical to ACA plans but customers can’t receive federal subsidies. The changes do not affect United’s Medicare plans or its other lines of health insurance.
“As insurance companies across the nation make adjustments in response to the evolving Marketplace, it is our sincere hope that you will continue to remain active in the health insurance market,” United’s notice reads. “Your knowledge and professional services are valued by consumers and carriers alike.”
Luisana said he does not intend to stop selling United plans. Instead, Luisana’s company started offering customers the option of paying a $150 consultation fee to Pilot Benefits when United recently cut the sales commission to 2 percent. Pilot Benefits might increase the fee now that the sales commission will go away.
Rolesville broker Leslie McMillan is also contemplating a consultation fee.
“I’m going to have to say, ‘If you want my help I’m going to have to charge you,’’ McMillan said. “It might be $50 an hour.”
Most agents are expected to stop selling United policies.
Rob Ferguson, an agent with Absolute Insurance Solutions in Raleigh, said he has 260 customers on United plans and will try to move those customers to Blue Cross and Blue Shield or Aetna plans, sold under the Coventry brand.
“If you want to go with United you can go on your own,” Ferguson said. “But you won’t have an agent to advocate for you.”
Ferguson said most of his customers are families, each family generating hundreds of dollars a year in commissions. For example, one of Ferguson’s customers, an optician with a wife and four children, is paying $1,520 a month for a United plan that’s been generating a sales commission of $1,824 a year.
“The thing that’s so disappointing to me as an agent is they’re changing the game and messing with people’s lives after the game has started,” Ferguson said.