If the health insurance industry wants to stave off a massive reform of the nation's healthcare system that leaves them out in the cold, they're doing this all wrong. An in-depth investigation by ProPublica and NPR's "Shots" blog reveals the obscene payouts insurance companies make to independent brokers for getting employers to sign up. Those massive payouts end up being passed on to those same employers, and the people who work for them, via higher coverage costs.
When I say "obscene," I mean really, truly excessive. Like Health Net of California’s providing bonuses of $150,000 for each employer group signed up. New York's EmblemHealth caps its per-employer group bonuses at $100,000, but offers unlimited bonuses and also gives top sellers "the chance of a lifetime" to bat against legendary New York Yankees pitcher Mariano Rivera. Cigna offers its top sellers five-day vacation stays at a luxury resort in the Bahamas.
These brokers are supposed to be the representatives of employer groups, hired to help them navigate the complex system of health insurance and get them the best options for their employee coverage. The employers are the brokers' clients, but the insurance companies pay the brokers with commissions that are generally 3 to 6 percent of the total premium cost to the employers. ProPublica provides an example of a company with 100 employees paying premiums that add up to about $50,000 a year for the broker, payable as long as the employer is holding that plan. That fee is coming from the premiums paid by employers and their employees. When the premiums go up, so does the broker's commission. These massive bonuses are also being paid out of the employers’ (and the workers they're covering) salaries, albeit less directly.
They're also creating a "classic conflict of interest" for the brokers who are supposed to be working for their clients in finding the best deal for them, says Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities.
He likens it to the "large body of virtually irrefutable evidence" showing doctors prescribe drugs that pharmaceutical companies push via payments and bonuses. "Denying this effect is like denying that gravity exists,” he said. Put simply, "If you want to draw a straight conclusion: It has been in the best interest of a broker, from a financial point of view, to keep that premium moving up." That's coming from Jeffrey Hogan, a regional manager of an actual national insurance brokerage who is trying to change the system to get rid of that conflict of interest by negotiating flat fees with employers.
For context, here's what was in the news last fall: "Nationwide, the average annual deductible for single coverage rose to $1,808 in 2017 an increase of $112 or 6.6%." Half of workers with employer-sponsored plans had deductibles as high as $1,300 for individuals or $2,600 for a family. On top of that, average "out-of-pocket limits for single-coverage work-sponsored plans rose to $4,246 nationwide, an increase of $147, or 3.6%, in 2017."
That's just one of the reasons that even people with employer-based coverage are open to the idea of moving to Medicare for all, or some kind of single-payer system. Stories like this will only drive that support up.