Despite competition, health insurance brokers still have role in industry

Startups takes on broker role, but industry believe traditional brokers still relevant

Are health insurance brokers becoming irrelevant? On one side of the argument, yes, it's possible that the Small Business Health Options Program insurance exchanges were meant to replace brokers, reported The New York Times. On the flip side, brokers may be essential to exchanges, David Chase, healthcare policy director for the Small Business Majority, told the NYT.

When Zenefits, a San Francisco-based startup that first began selling cloud-based human resources software, began taking on the role of online insurance broker, it left the industry wondering what exactly was left for traditional brokers to do. Not much, Parker Conrad, founder and chief executive of Zenefits, told the NYT.

To make the case for brokers, Chase believes that exchanges must learn from past experiences, in that eliminating brokers from the exchanges only creates unnecessary enemies. That's what happened in Utah, which banned Zenefits from serving as a broker there. Instead, if brokers and exchanges work in tandem, the partnership can create a strong sales team.

During last open enrollment period, brokers were key players in certain states' enrollment success. For instance, 39 percent of enrollees in California signed up using a broker, as did 44 percent of Kentucky enrollees, FierceHealthPayer previously reported.

"It's simply hard to disrupt a relationship that has existed in some way or form for decades," Alan Cohen, found of Liazon, a private benefits company, told the NYT. "Every company has always used brokers."

The fate of brokers will, most likely, rest in the hands of business owners--and, more specifically, what those business owners want and need. People want that personal touch.

Brokers are smiley, chatty people who first make you comfortable and then sell you something, Paul Downs, a business owner, told the NYT. "It's a personal business, it's a service support business, and you want a broker who if there's a problem will show up in your office today."

For more:
- here's the NYT article

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