When the Affordable Care Act was passed in 2010, Orange County, Calif. broker Patrick Freeman took the opportunity to read the law in its entirety, along with 100 other independents in the state. His initial impression?
“We basically said, ‘This thing will be a disaster,’” Freeman said. “We were just stating our feelings—it wasn’t political one way or another. It just looked like a convoluted mess that seemed like it was designed to fail.”
Freeman’s feelings on the ACA were shared by much of the independent insurance industry, and four months in, outlook is admittedly pretty bleak on the home front. According to a new survey from LIMRA, 72% of responding benefits advisors say health reform has had a negative impact on sales of group insurance.
Another half believe a significant number of their commercial clients will drop health coverage for employees altogether.
However, not all ACA outlook is grim. Though Freeman does much of his business through Medicare and Medicare advantage plans, Freeman Insurance Agency has also seen an influx of individual health clients that have significantly added to its total book of business.
That echoes the 42% of brokers who told LIMRA they noted a “potentially positive effect” on sales of individual insurance policies.
“Sales on the individual side are way, way up,” said Freeman, noting that the increase has taken place despite a lack of pursuit on his behalf.
“What we have is about 50/50—50% of our clients are new and 50% are changes planned because they have to, for a variety of reasons,” he said. “I would say a good 60% to 70% of those are people who haven’t had coverage at all in the past few years.”
Freeman expects the upsurge to continue through March as individuals rush to avoid the possibility of a tax penalty come April. Then, he will focus on his group clients, which he expects will eventually trickle into individual sales following the December renewal period.
However, even in group policies, there is reason for hope. While small groups with fewer than 50 employees are expected to drop medical insurance plans, producers working with larger and midsize groups don’t expect such a steep decline.
Hutch Mauck, president of Scott Insurance in Lynchburg, Va., acknowledges that healthcare reform presents challenges, but believes that Scott’s middle-market clients with 250 or more employees are actually poised to increase their health offerings.
“We anticipate that as we move forward, companies will continue to seek competent and strategic advisors to manage risk and employee benefits,” Mauck said. “And because of this, there’s actually going to be more opportunity for Scott in the future.”
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