“Administrative Waste” – Will Brokers Survive?

I woke up this morning feeling a little cranky and on edge because I received a letter from Aetna this week announcing some health care reform changes that will affect me along with probably a thousand other brokers. I was too busy to really give the letter much attention but now that I’ve had some time to ponder it,  I thought I would get a few things off my chest. So please forgive my bellyaching.

When Obama was travelling the Country last year campaigning for Health Care Reform, in his speeches he often referred to changing the “administrative waste” in the health care industry with reform. Unknown to many at the time, “administrative waste” must have included brokers and agents who make a living helping small business owners with their health insurance programs.

Aetna is the first insurer to heed the cry of the President and will cut their “administrative waste” by eliminating broker commissions and start paying us a “fee for service.” The fee for service from Aetna amounts to about $21 an employee. Drastically cutting our compensation and our incentive to sell health care products offered by Aetna.

Some who may be reading this may be thinking, “well good for Aetna, you brokers probably get paid too much anyway.” In reality, many of us make a good living selling health insurance and as anyone who is in sales will tell you, selling is hard work. In addition to sales, we need to service our clients. Servicing clients means we need staff, offices, computers, phones and so on, everything it takes to run a business. Most brokers are entrepreneurs and we chose to run our own businesses because of the rewards that come with working hard. We are also small business owners and we are part of the 46 million small businesses in America that provide employment.

Aetna is the first insurer to eliminate broker’s compensation, it’s probably only a matter of time before the other insurers join the bandwagon. Will health brokers survive?