Recent surveys show that 53 percent of the American public does not know what the Affordable Care Act is. Tony Boquet, CLU, ChFC, CASL, CLF, LUTCF, told NAIFA members who attended his workshop at the NAIFA Career Conference that the job of agents and brokers is to take complexity (the ACA is 1,000 pages long and has spawned reams of regulation) and make it simple so clients can understand.
As a specific example, Boquet said is the ACA’s “Play or Pay” rule, which says businesses with 50 or more employees must provide affordable health coverage or pay a $2,000 tax for every employee above the first 30. “It falls to agents to educate businesses on the consequences of play or pay by 2015,” Boque said.
The ACA is going to increase costs, Boquet said, by removing cost-containment strategies currently provided by underwriting as well as annual and lifetime limits. The law’s essential health benefits provision means that certain types of coverage are required – even for those who may not want them. For example, Boquet says, an unmarried 19-year-old female will be required to carry maternity coverage, even if she has no intention of becoming pregnant. People will have fewer choices and will be paying for things they don’t necessarily want.
The psychology of consumers also plays a part. Boquet cites research showing that people with spending authority who are ultimately not responsible for paying the bill spend 300 percent more than those spending their own money. An individual whose health care expenses do not come out of their own pocket doesn’t care whether an MRI costs $6,000 or $3,000, Boquet says.
The ACA will also shift costs around. The law’s 3:1 age-band rating means that the highest risk insurees can pay no more than three times the premiums of those with the lowest risk. That means that people who are young and healthy will see their premiums rise. Employers, meanwhile, will shift their increasing costs to employees.
While a number of ACA provisions are troubling, Boquet says, they remain the law of the land. They present agents and brokers with opportunities to advise companies in need of strategies to contain costs while ensuring that they comply with the law.