Local agents say insurers cutting down health insurance commissions

Independent insurance agents in the El Paso region are getting a new notice: They won’t get a commission anymore for selling certain health insurance plans. ABC-7 spoke to one such agent concerned about the impact to his business and customers.

Richard Madrigal has been in the insurance business for more than 40 years.

“The last couple or three years with this Obamacare, the changes have been humongous,” Madrigal said. “You have to be abreast of it. If not, you’re going to miss everything that’s going on.”

Madrigal said he’s kept up with the latest, but a change announced on Tuesday could force him out of the personal health insurance business entirely.

“They emailed us from Blue Cross/Blue Shield at 2:16 p.m., that they were cutting commissions on the agents on any individual under the age of 65 on a medical policy,” Madrigal said. “Whether it was marketplace or off market, effective April 1, no longer were we going to receive commissions.”

Madrigal said that the trend is not new, with other agencies cutting down commissions in recent years.

“Over the last two years, I personally have lost approximately 20 percent of my income on the health side, maybe up to 30 percent,” Madrigal said.
ABC-7 contacted Blue Cross/Blue Shield of Texas about the change, and got this response:

“Blue Cross and Blue Shield of Texas (BCBSTX) has been serving Texans for over 80 years, committed to expanding access to quality health care to as many people as possible through the retail market, and offering products in all 254 counties across Texas since the inception of ACA. However, as this market evolves, we, in turn, need to make changes to the way we operate in order to continue offering sustainable health plan options to our members.

“BCBSTX will eliminate broker commissions for new sales of individual (ACA) plans effective April 1, 2016. This does not impact commissions for individual renewals, any sales or renewals within the group market or Medicare market, or retail ancillary products. As always, we assess and evaluate our commission structure on an ongoing basis and will make adjustments as appropriate. We plan to re-evaluate broker commissions for the sale of new individual plans with a Jan 1, 2017 effective date.

“We recognize that consumers may still need support when making health care decisions throughout the year and BCBSTX offers comprehensive resources to help them better understand their health care benefits. For example, our provider finder helps consumers find the best doctor or hospital based on their needs; our subsidy estimator helps determine the type of information they need to find out if they qualify for financial assistance; and we have a variety of educational resources – in both English and Spanish – to help consumers navigate the entire health insurance process.”

Madrigal said while he can hopefully adjust, he’s concerned about the individual clients looking for health insurance who may not have a local agent to turn to anymore.

“Who’s going to want to sell it?” Madrigal said. “And do work for nothing? For free?”