HEALTH INSURANCE BROKERS: Overpaid and Underworked?
Hundreds of millions of dollars paid in health insurance premiums each year bypass doctors and hospitals, instead ending up in the pockets of health insurance brokers, the middlemen who help employers decide which health plan to purchase. The Sacramento Business Journal reports that brokers' "commissions can range from as low as 2.2% of the premium amount spent by extremely large employers, to as high as 20% of the premium spent by individuals and small businesses." The average commission range, brokers claim, is between 4%-8%. However, in an industry where all the players seem to be scrambling for more money and the patients often lose out on coverage, some are starting to question whether the large fees collected by brokers are justified. "In the age of tight reimbursement, that's a well-concealed piece of the health care dollar," said Tom Elkin, former director of CalPERs, the health benefits program run by the California Public Employees' Retirement System that does not pay out fees to brokers. "Premium dollars are viciously fought over by medical groups that are going broke and hospitals that aren't doing so well ... [That money] should at least be on the table for people to consider," Elkin added.
Questions about the legitimacy of brokers' fees puts many on the defensive, especially those who claim that their commissions are justified and that they are more than simply middlemen. The Sacramento Business Journal reports that "it's a competitive field that requires a lot of hand holding, over and above the actual selling of a health plan." Brokers offer a variety of services, which often require them to reinvest between 60%-70% of their fees back into "taking care of the client," said Jack Seibert, a 24-year veteran broker. Brokers offer health plan comparisons and help clarify complex regulations to the customer, as well as act as liaisons between the client and the insurance company when there are problems with coverage. "Now the broker is more of a health care consultant," one broker said. However, Elkin still contends that the fees are excessive, and "thinks it's time brokers are held accountable for money they take out of the industry," an unsavory prospect for many brokers and the insurance companies who have used brokers to increase their business. "Why is this anybody's business?" one broker asked when questioned about the subject (Robertson, 9/13).