Twenty-nine percent of independent insurance brokers claim their businesses have been injured by Obamacare, according to a new survey.
Thirty-three percent of the respondents also said they are considering getting out of the health insurance business entirely because of Obamacare.
The survey was conducted by McKinsey & Com. of more than 1,000 independent brokers during Obamacare’s first “open enrollment” period from October 2013 to April 2014.
The brokers are members of the National Association of Health Underwriters, which commissioned the survey.
Twenty-three percent of the respondents said they are particularly worried about “premium stability” for consumers. Another 16 percent cited concerns about the long-term financial health or “sustainability” of Obamacare.
Many of the respondents also claimed they spent countless hours with their clients on the error-prone healthcare.gov website.
In addition, many expressed unhappiness because Obamacare regulations slashed their commissions.
“I think the time of the independent agent may be coming to an end,” one of the respondents told McKinsey.
“I think there is going to be an exodus of agents over the next 5 years,” said another to the surveyors. “Folks will slowly retire or partner with larger firms.”
“Many brokers who did work with me are leaving the business and there is no incentive for new people to go into insurance anymore,” said a third respondent.
Advocates for Obamacare tended to lump small, independent mom-and-pop brokers with large insurance companies and sought to punish them both.
Typical of activist hostility toward brokers was the testimony of Elizabeth Abbott, a director for Health Access California, an activist group.
On Jan. 13, 2011, she told a federal advisory board she was pleased California’s health exchange had barred independent brokers from serving on the state board, stating, “thus the industry should not be on both sides of the same table.”
Reformers also imposed what is called the Minimum Law Ratio in healthcare spending, meaning that insurance companies can spend only 20 percent of their revenues for administrative overhead, including broker commissions.
“So guess what the first thing was that insurance companies chopped? Yeah, they started cutting back on agent commissions,” said Ryan Thorn, a Salt Lake City broker and president of the underwriters association.
Thorn said his income dropped 30 percent despite the additional workload imposed by Obamacare, and that other brokers saw their take home pay drop even further.
Widespread confusion among consumers as a result of the law’s complexity meant that brokers had to spend much more time helping their customers fill out enrollment forms, according to the survey.
“There has been a 300 percent increase in time spent sharing information compared to the past — about three hours per enrolled life,” one broker told McKinsey.
McKinsey reported 69 percent said it took two sessions or more on the government website to complete the enrollment form.
Sixty-two percent said their top problem was educating a confused public.
“Dealing with the marketplace was a real struggle for many, just the complexity of it all. The confusion factor is the biggest concern I have,” said Thorn.
