5 minute read

Winter is Coming for California’s Health Insurance Brokers

By Michael Blea, Chief Growth Officer at SCAN Health Plan

I've spent three decades in this industry, and I’ve witnessed the cyclical nature of the market. I remember the Balanced Budget Act of 1997, which created the Medicare+Choice Program, which became known as Medicare Advantage.

I recall the economic downturn of the late 2000s, when one of the largest insurers abruptly downsized. One morning they sent busloads of sales and telesales representatives to a hotel, told them their positions had been eliminated and promised to ship their belongings to their homes. It was a stark reminder of the volatility inherent in our profession.

Since then, a new generation of brokers has entered the field. Most of them have experienced nothing but boom times. However, for those of us who have weathered the busts, ominous clouds are gathering on the horizon, signaling potential trouble ahead.

Market Shifts and Financial Pressures

Insurers are beginning to exit the Medicare Advantage (MA) markets. Some carriers aren’t paying commissions on stand-alone prescription drug plans.

Others have removed their MA plans from online enrollment platforms. The Inflation Reduction Act has introduced changes that lower reimbursement rates and increase financial pressures on insurers. It’s not just insurers feeling the strain; at least 15 hospitals and health systems have also pulled out of Medicare Advantage.

For brokers measuring their sales numbers, the signs of a decline are evident. Make no mistake: we are entering a bear market. But how can brokers navigate and succeed in this challenging environment? It’s time to rethink our approach to enrollment. Here’s how:

Focus on Quality Sales

Dumping clients into an MA plan without considering their long-term health needs does little to benefit them. Insurers are looking for members who are connected with the right doctors and who will remain loyal to both, in return for supporting their health. Brokers should adopt this focus as well. Quality sales, where clients are matched with plans that truly meet their needs, will lead to better health outcomes, more satisfied customers and longer-term stability for everyone.

Look to the Long Term

Our current system allows for annual enrollment and disenrollment in plans, leading to significant churn. However, this churn does not benefit either the member or the insurer. Health costs decrease and health outcomes improve when insurers, physicians, and members can make long-term investments in health. Brokers should seek out plans with provider networks that will support members for years to come, fostering stability and continuity of care.

Brokers who focus on health and serve that purpose will find that they not only survive this period but also come out on top.

Be a Trusted Advisor

Each year, thousands of people enroll in plans and are randomly assigned providers. When these mismatches occur, members often drop out of the plan. The lack of stability leads to missed preventive care and can lead to health declines. Brokers have a special role to play as trusted confidantes. By serving as a link to the right providers, brokers can help ensure smoother relationships between carriers and physician groups. This, in turn, yields better long-term health outcomes and more enduring customer relationships. Greater member satisfaction and improved health outcomes also lead to higher star ratings, which are vital for plans, providers, and patients alike.

Choose Higher-Rated Plans

Amid these market shifts, it’s crucial that brokers steer clients toward higher-quality plans. Pay attention to plan ratings; if a plan’s ratings decline, it’s a sign that it’s probably not the best option for your client. On the other hand, high-quality plans with high star ratings have more resources to support your clients’ health. Enrolling them in these plans is an easy way to ensure long-term satisfaction and customers who will be as loyal to you as they are to their doctor and carrier.

Support Your Community

Some brokers go above and beyond by helping clients find care, navigate medical bureaucracies, locate the best prices on medications, and even connecting them with life-saving social services. These brokers are not just salespeople; they are trusted members of their communities. By leveraging this trust, they help clients access a range of health solutions that may not be provided by an insurer. Brokers have a role to play in better health, and this is a powerful way for them to fulfill it.

Navigating Stormy Waters

Yes, we are in stormy waters, and there are signs of problems ahead. However, this does not mean we are heading for collapse. Medicare Advantage remains the best plan option for most seniors, providing the coverage and benefits they need to lead healthy lives in their later years. Brokers who focus on health and serve that purpose will find that they not only survive this period but also come out on top.

Michael Blea leads SCAN’s Medicare growth operations across five states—California, Arizona, Nevada, New Mexico, and Texas. With over 25 years in the health insurance industry, he has deep expertise in scaling Medicare distribution channels. Previously, he was Vice President & General Manager at Golden Outlook, where he built one of the nation’s largest field marketing organizations. He also held leadership roles at Health Net and Secure Horizons/PacifiCare.

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