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Agents cry foul on health reform

While the federal government focuses on creating a health care system that its leaders say will benefit all citizens, Ray Lipsch fears for his career as a health insurance agent.

"No one's looking out for the insurance agent," he said. "We need to be more active, more vocal. We need to be more a part of it (and) make the politicians know what we do for small business.

"They're going to cut out the little guy first."

Lipsch, who says agents are being unfairly singled out to bear the burden of reform, fears the impact of state and national health reform plans that could do away with the need for agents.

Experts say his fears are valid.

"Once the alliances are up and running, there is little if any room for them," said Kevin Anderson, an analyst for the non-partisan Alliance for Health Reform in Washington. "I can't really think of another professional group who will be as cut out of things. If I were an independent agent who specialized in small businesses, I'd be thinking about getting out of health."

Anderson says a goal of reform is to eliminate the need for agents because of the additional costs for their services.

Officials in the Department of Insurance say it's difficult to know exactly how many independent health agents there are in Florida, but about 103,000 agents are licensed in the state to sell life, health, property and casualty policies.

The National Association of Health Underwriters has 12,000 members with a total of 119-million clients. The local west coast chapter has about 250 members, Lipsch said.

Typically, about 40 percent of premiums goes to agents for their salaries and overhead costs, Anderson said. "One of the reasons small group health is so expensive is because of agents."

But the national association, which is ending a conference on reform in San Francisco today, has embarked on an aggressive lobbying campaign to counter arguments like Anderson's.

Lipsch, who serves as president of the association's local chapter and is attending the meeting, says he is optimistic about the organization's chances of embracing reform and convincing the public of the importance of agents.

"I can't believe it," Lipsch said Monday from his hotel in San Francisco. "I am feeling empowered. The organization is definitely moving to the center from the right.

"We need to let our voices be heard."

Cutting agents from the health insurance process would only hurt consumers, Lipsch said.

"We have the knowledge of how companies work and what the best networks are," he said. "We can bid the market and see who's the most competitive."

Lipsch says the state-funded Florida HealthAccess program exemplifies how reform-minded organizations are phasing out agents.

HealthAccess, which pools employees of small businesses into larger groups capable of buying affordable health care, recently dropped its agents and is in the process of shuffling through bids of agencies wanting to sell the organization's plans.

Once the brokers are awarded licenses, HealthAccess will pay them about 3 percent commission per client per month, totaling about $85,000 a year for the agents, HealthAccess officials said.

"They want us to sell it for them but they don't want to pay us," said Lipsch, who did not work with HealthAccess. Most agents pocket about an 8 to 10 percent commission, he added.

Instead of cutting agents out of the process, reformers should recognize they benefit consumers, Lipsch said.

"A good agent is worth a lot. We bring the products to the consumer. We're independent. We're not captive to one company."

But supporters of reform aren't so sure.

"There are over 8,000 different rates and nobody, including agents, has access to all the different rates," said HealthAccess spokeswoman Madeleine Carr. "I don't necessarily think the best deals are available exclusively through agents because they're working on their behalf and not the consumer's."