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A win for Maryland health insurance brokers

June 2nd, 2014

Maryland Health Connector

Credit: Maryland GovPics via Flickr under Creative Commons

Last week the Maryland Health Benefits Exchange passed a resolution to turn over the enrollment duties of the state’s Small Business Health Insurance Options Program (SHOP) to its Maryland health insurance brokers. The move came as a surprise to many as the state is currently switching contractors to fix its faulty individual health insurance exchange.

The SHOP exchange was originally designed to be very similar in form and function to the individual health insurance exchanges in each state. However rather than selling individual policies, the SHOP exchange focuses exclusively on small group plans for certain sized businesses.

At the time of this writing, the specifics of just how the state will create, order and manage their system of approved brokers remains to be seen. However if the Maryland Health Benefits Exchange upholds their decision to use approved Maryland health insurance brokers, then the Old Line State has set itself very much apart from the rest of the country.

Long running problems with the SHOP Exchange

The Affordable Care Act’s Small Business Health Options Program has had a long history of problems. Initially the SHOP exchanges were expected to launch alongside the individual health insurance exchange on October 1, 2013. However the SHOP exchange was delayed for the federal health insurance exchange at HealthCare.gov.

However states running their own health insurance exchanges had the option to open their SHOP exchange for the 2014 open enrollment season. In New York and California for example, the SHOP exchanges were up and running alongside the individual health insurance exchange with few hiccups. Other states though, like Maryland, were not so lucky.

Without a clear path to purchase ACA compliant health insurance plans for their employees, many small businesses turned to Maryland health insurance brokers for help during the 2014 open enrollment. Now Maryland is looking to formalize that process, which could have far reaching positive impacts for health insurance brokers nationwide.

Why Maryland’s decision is the right one

If there is one group with a big stake in the outcome of the ACA, whose concerns have not been heard or thoroughly addressed enough it’s health insurance brokers. These are the folks who make a living from good relationships with health insurance providers and knowing each and every one of their policy offerings from front to back. Simply put: They’re the experts when it comes to health insurance.

By  acknowledging the important role that brokers have historically played in the health insurance system, and have continued to play in the changing system under the ACA, Maryland is making waves.

The economic reason for brokers in Maryland

It’s not just that brokers are experts, by formalizing their role states can potentially save ten of million of dollars.

The Maryland Health Insurance Exchange, established as part of the ACA, suffered it’s fair share of problems during the last open enrollment . It was a fairly broken piece of technology. So broken in fact that the Maryland state legislature decided to scrap the system altogether and  fire the original contractor, Noridian Healthcare Solutions.

Noridian’s contract was to build both an individual health insurance exchange and the SHOP exchange, which it failed to do effectively. The result was a $55 million loss for the state. Now Maryland is working with Deloitte Consulting to help rebuild their individual health insurance exchange. Deloitte is the same company responsible for the extremely successful health insurance exchange in Connecticut.

Added altogether Maryland has so far spent well over $100 million between the hiring and firing various software contractors for their exchange. Not to mention the general cost of implementing other aspects of the Affordable Care Act within the state.

It’s estimated that by having health insurance brokers handle enrollment for small businesses, the state could quite a bit of money. According to Audacious Inquiry, a firm hired by Maryland to evaluate the best way to proceed with their SHOP exchange, the cost of allowing health insurance brokers to handle small business enrollment would be between $1 and $3 million versus the $20 million that would have been paid to Noridian Healthcare Solutions to establish the SHOP exchange their way.

Health Insurance Brokers the future of the ACA

While this surprising twist of events is perhaps good news for those brokers in Maryland, what does it mean for the long term implementation of the ACA?

The fact that states running their own exchanges are still experiencing technical issues, speaks perhaps to a deeper set of problems with the ACA itself. Some states like Maryland will fight on and fix their exchanges while others like Oregon and possibly Massachusetts, will throw in the towel and let the federal government run their exchanges for them through HealthCare.gov.

But is there an option that states have not considered?

If there’s one thing that customers may have found lacking during the open enrollment season last year it was  a lack of face to face contact with someone knowledgeable during the health insurance buying process

Maybe states could take a cue from Maryland and look towards getting health insurance brokers more involved in the enrollment process? Not just for small businesses, but also for individuals. Simply having the option available to work with a broker rather than a clunky online enrollment system cannot be that difficult can it?

For the consumer it would be a win-win situation. Because the ACA does away with brokers being able to charge an upfront fee for their services, they are only paid on commissions from the policies they sell. Essentially that means the expert service and advice of Maryland health insurance brokers are free for the customer. Small businesses enrolling in the SHOP program in Maryland will no doubt  recognize this, and maybe demand more.

Maryland Health insurance brokers have suffered because of the ACA, and some have even closed up shop. However those that are left are the resilient ones, and the ones who truly want to help people navigate the confusing nature of the Affordable Care Act, and get the coverage that’s right for them.

So while states scramble in different ways to get their exchanges ready to go for the start of the 2015 open enrollment season in November, maybe their magic bullet isn’t another multimillion dollar contract with a municipal software company, maybe it’s brokers?