Insurance Agents: Ignored Players In Health Insurance Reform After reforms, insurance agents in New Jersey still exert a good deal of influence in the individual health insurance market. by Deborah W. Garnick, Katherine Swartz, and Kathleen Carley Skwara I nsurance agents and brokers play a key role in the sale of health insurance to the approximately 7 percent of nonelderly Americans who purchase individual policies. 1 Lawmakers at both the state and federal levels have devised reforms to the health insurance industry that are largely silent on agents’ role in selling insurance—in part because of agents’ political clout. Indirectly, however, these reforms have the potential to curtail agents’ traditional role. At the same time, agents have enormous power to influence how the reforms are implemented. The reforms to the individual health insur- ance market in New Jersey illustrate the com- plex interaction between insurance agents and insurance reform initiatives. New Jersey implemented the Individual Health Coverage Program (IHCP) in August 1993, in response to a federal court ruling that overturned the state’s program to finance hospital care for indigent persons and subsidize Blue Cross and Blue Shield of New Jersey as an “insurer of last resort.” 2 The IHCP requires that insurers participate in the individual health insurance market in New Jersey, either by selling coverage in the individual market or by paying an assessment to fund the reimbursable losses of carriers that do sell such coverage. 3 The types of policies in the individual market are standardized: Carri- ers can offer only a health maintenance organi- zation (HMO) plan and five indemnity insur- ance plans with a standard set of benefits. 4 The IHCP also requires guaranteed issue and re- newability, community rating, limitations on the use of preexisting condition exclusions, and a minimum loss ratio of 75 percent. 5 With the exception of the requirement that all insur- ers participate in the IHCP, these regulations for the individual insurance market are similar to legislation being considered in other states. 6 © 1998 The People-to-People Health Foundation, Inc. Deborah Garnick is a research professor at the Institute for Health Policy, Heller School, Brandeis Univer- sity, in Waltham, Massachusetts. Katherine Swartz is an associate professor in the Department of Health Policy and Management at the Harvard School of Public Health. Kathleen Skwara is a research associate at the Institute for Health Policy at Brandeis. ABSTRACT: In this paper we use the reforms to the individual health insurance market in New Jersey to illustrate the intricate interaction be- tween insurance agents and insurance reform initiatives. Until recently, policymakers who de- signed reforms to the health insurance market largely ignored the role of agents in selling indi- vidual health insurance policies. These reforms have the potential to overturn the agent’s tradi- tional role, and agents can influence how the reforms are implemented. 137 HEALTH TRACKING: MARKETWATCH HEALTH AFFAIRS ~ March/April 1998 Downloaded from HealthAffairs.org on June 06, 2020. Copyright Project HOPE—The People-to-People Health Foundation, Inc. For personal use only. All rights reserved. Reuse permissions at HealthAffairs.org.