UnitedHealthcare plans to stop paying commissions for insurance policies offered through exchanges beginning Jan. 1, a move brokers say signals the company’s retreat from Obamacare business.
“That’s typically always the first thing to go if they’re going to start pulling out of a specific market or not offering those programs any longer,” said Tim Tracy Jr., a Fairfield insurance broker and president of the Connecticut Chapter of the National Association of Health Underwriters.
Tracy noted that eliminating the commission payments probably would significantly reduce sales, since brokers wouldn’t be promoting the company’s products. Between 30 and 35 percent of the Connecticut exchange’s business comes from agents and brokers, exchange CEO Jim Wadleigh said.
UnitedHealthcare has already signaled the possibility that it would pull out of the public exchanges in 2017. UnitedHealth Group CEO Stephen Hemsley said last month that the company was losing money on exchange business and would determine during the first half of 2016 whether it would continue to sell plans through public exchanges.
Asked about the decision to stop broker commissions, the company issued a statement that 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.”
Hemsley alluded to the move in his Nov. 19 earnings update, saying the company had taken “several immediate actions to reduce our exposure in this segment,” including suspending marketing and reducing or eliminating commissions in most markets.
UnitedHealthcare has a relatively small presence on Connecticut’s exchange, Access Health CT. The company didn’t participate in any of the exchanges created under the federal health law in 2014, the first year they operated. In 2015, its prices on Connecticut’s exchange were among the highest, and the company captured about 2 percent of customers (as of March, at the end of the open-enrollment period, 2,278 people had signed up for the company’s plans).
The company’s prices for 2016 coverage remain among the highest on the exchange, and as of mid-November, UnitedHealthcare had received only about 2.7 percent of the business from new customers.
The company sells plans through exchanges in 34 states.
According to a memo the company sent to brokers and agents, UnitedHealthcare will not pay commissions for new individual exchange enrollments starting Jan. 1. The change also applies to health plans sold outside the exchanges that are identical to exchange plans – so-called “mirror plans.” UnitedHealthcare will still pay commissions for exchange plans sold before that date. The changes don’t apply to New York and California, the memo said.
The move will likely have a “chilling effect” on sales of exchange business, said John Calkins, president of Bozzuto Associates in Watertown.
“If that’s United’s direction, they could forget any business from agents,” he said.
Commissions for agents and brokers are included in the premiums insurance customers pay. Asked whether anything would prohibit a company from collecting premiums with commissions included but not paying them when agents or brokers sell the policies, Connecticut Insurance Department spokeswoman Donna Tommelleo said, “The department is in discussions with UnitedHealthcare.”
Wadleigh called agents and brokers a key partner for the exchange in educating consumers about how health insurance works, and said he expects they won’t sell UnitedHealthcare products if they aren’t compensated for it.
Wadleigh said he hasn’t spoken to other insurers about the issue, but wondered whether others will also make changes to their broker commissions.
“United could be starting an industry trend,” he said. If that happens, he added, the exchange will have to revisit how it sells its business.
Although leaders of other insurance companies have indicated that they plan to stick with exchanges for now, Wadleigh said he expects them to examine the business climate in each state where they do business – and that exchanges will have to help ensure the climate is conducive to insurers offering products.
Insurer HealthyCT said it has no plans to change its broker commission program.
“Brokers are our valued partners in helping to educate, enroll and serve our on- and off-exchange members,” the company said in a statement.
ConnectiCare also plans to continue paying commissions for exchange plans, a spokeswoman said.
A spokeswoman for Anthem Blue Cross and Blue Shield did not immediately respond to questions Wednesday about whether the company would change their commission policies.