The Role of Brokers in the Exchange

CAHU’s V.P. of Communications, Meg McComb, recently interviewed Chris Patton, vice president of SHOP and Agent Management for Pinnacle. The following are some highlights of his comments:

• I don’t see cataclysmic scenarios happening in the small group market. Covered California will offer coverage through the SHOP and the individual marketplace. Agents will have the ability to offer products, and we could see more dependent coverage through the individual marketplace, depending on the employer contribution. Having the two Covered California products available to agents presents an exciting opportunity for agents and the potential insured.

• Agents who embrace the upcoming changes and tailor their marketing to meet the needs of the consumer are going to be wildly successful. The opportunity for agents is very similar to when AB 1672 got passed. It was the same reaction; everyone was freaked out. Some thought that they were going to have to change professions, but others thought, “Wow, this is an opportunity.” If an agent sees this as an opportunity to provide new product and information to business owners as a trusted advisor, I am confident that they will thrive in 2014 and beyond. Business owners are thirsty for information. There are agents and agencies out there that have embraced the upcoming changes and are communicating to their clients and prospective clients.

The ACA has prompted several new [private] exchange offerings. Competing private exchanges that offer good products at competitive prices will be a good thing for our market and will help to increase awareness for the model. Guaranteed issuance for individuals will have a significant impact in the market. It’s a huge change to policy. The real question is whether we will see small groups migrate away from purchasing group coverage and encourage their employees to individual coverage instead. Businesses that continue to provide group coverage in 2014 and beyond will enjoy employee retention, increased productivity, and reduced  absenteeism. The success of SHOP is going to depend on the agent distribution system. Working with the SHOP distribution model will be no different than working with a carrier or a TPA. We are agent driven. My team is here to support agent sales. We are looking to the certified insurance zgent for distribution direct and through our general agent partners.

• The SHOP will bring a new mix of carriers at a very competitive price point. In 2014 small business must be enrolled in the SHOP to benefit from available tax credits. Not every group will benefit this since there are limits to the number of employees and average income. But there will be significant advantages for employers that fall into the sweet spot. Covered California will have a tax credit calculator available later this Fall that will allow agents to get an idea of what a tax credit would look like for a small business.

• The SHOP’s networks will represent over 80% of the doctors and acute care hospitals in California. We will have a complete picture in the coming weeks, but I think we will end up with networks that allow SHOP to be a strong competitor.

• We have seen an incredible response from the agent community to the registration and certification process with Covered California. In the coming year there will be a lot of change. Agents will have a big job to do getting information to the consumer. Agents will have an opportunity to show that they are a necessary and valuable part of those changes in their role as trusted advisors.

• The technology that will power Covered California in the small group market is going to be a big change. Online enrollment will be the primary submission method. We will accept applications by paper, phone, and fax, but online is the fastest route for a group to get issued. This technology will be a big factor for agents and their clients. Small group employers and their employees aren’t used to using iPad’s and sitting around on their computers to fill out their applications. The online enrollment feature represents a technological advance for the small group market. It will be interesting to see the adoption rate. The small group underwriting process will change in 2014. CalHEERS represents exciting technology in the small group space that we have really only seen for large group. It will be interesting to watch the early adopters change the way small group has traditionally been presented and enrolled.

Last Updated 01/19/2022

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