As lawmakers on both sides of the aisle debate the merits of the American Health Care Act and its possible effect on the poor, the sick, and the elderly, we thought we’d look at the proposed law from a different perspective: from the viewpoint of health insurance agents.

Is the pending legislation, good or bad for insurance advisors?

To answer this question, we must first look at the impact on your clients. Based on an analysis by the Congressional Budget Office, 23 million more people would be uninsured in the next 10 years if the AHCA becomes law, with 14 million people losing their coverage as early as 2018. Second, states that apply for waivers will see significant premium variations between healthy and sick people since carriers will be able to rate based on pre-existing conditions. And finally, older people nationwide will pay more as a result of expanded age rating.

With just those details, we can start to analyze the good and bad for agents.

First, the obvious: if the law causes some of your clients to cancel their insurance policy, that’s not a good thing. Agents who approach the possible changes with a glass-half-empty mentality will worry that their client base will shrink, and they’ll quickly find that to be true.

On the other hand, brokers who look for the opportunity in the new law will easily find it. The turbulence that will accompany any repeal and replace legislation will cause confused consumers to seek out advisors who can help them make sense of it all. There will be no shortage of business for agents who are prepared to answer their clients’ questions and ease their concerns.

We will no doubt see new solutions emerge if the Affordable Care Act goes away, and AHCP will certainly share the details with you when those solutions hit the market. For now, though, we can predict that some of the millions of people who lose their health insurance will be searching for some form of coverage to protect their families’ finances. Just because they can’t afford comprehensive health insurance, without the assistance of Medicaid or a Premium Tax Credit, doesn’t mean they don’t need a way to offset the cost of medical bills.

You already have the answers!

Even without any new solutions, many of the products that you’re currently recommending to your clients (or at least have available to you through your affiliation with AHCP) will be in high demand if the health law passes and the CBO’s predictions are even close to being accurate. Here are a few ideas:

• Health Savings Accounts – We should start off by pointing out that many of the plans you’re already selling, and an increasing percentage of plans that will be sold going forward, are HSA-compatible. It’s imperative that you take the additional step of making sure your clients set up a Health Savings Account if they’re eligible. While they may not have enough discretionary income to fully fund their account, if they do have a big claim, they can at least run the expense through the HSA and pay with tax-free dollars.

For those who lose their coverage as a result of ACA repeal, any funds in their HSAs can be used for eligible medical expenses, though they wouldn’t be able to contribute additional funds without a qualified plan.

• Cancer and Critical Illness Plans – According to the National Cancer Institute, an estimated 1,685,210 new cases of cancer were diagnosed in the United States and 595,690 people died from the disease in 2016. Millions more are diagnosed with some other form of critical illness each year. A cancer or critical illness policy can help to offset big deductible expenses when someone is first diagnosed with or receives treatment for a serious medical condition and can help preserve any HSA funds your clients have been able to accumulate.

While these policies may not pay all of the medical expenses for someone who loses his or her health insurance, they’re a lot less expensive than comprehensive health coverage (which means your clients can afford them), and they will help cover some of the medical bills.

• Accident Plans – Similar to critical illness policies, accident plans can help offset big medical expenses when someone has an unexpected injury, also helping people to preserve their HSA funds.

Accident plans can be especially attractive to uninsured “young invincibles”, who rarely go to the doctor and appear to be in good health, but could wind up in the hospital if they’re in a wreck or suffer a covered sports injury.

• Short Term Medical – Short term medical plans are not considered to be minimum essential coverage and therefore do not satisfy the ACA’s individual mandate requirement. Of course, the individual mandate penalty will go away if the AHCA becomes law, in that event these policies could provide a temporary solution for your clients who need health coverage. They also tend to be less expensive and require less cost-sharing than many ACA major medical policies.
• Limited-Benefit Plans – Unlike short term plans, limited-benefit plans are more of a long term solution. However, there is a cap on how much they will pay in a calendar year. For that reason, they are not considered minimum essential coverage.

Federal regulators had said that limited-benefit plans were not permitted without an underlying policy that provided minimum essential coverage, but a court ruled several months ago that was an overreach and stand-alone limited-benefit plans are, in fact, permissible. Going forward, we expect to see more of these limited-benefit offerings and more interest in them as an alternative to major medical plans.

• Health Care Sharing Ministries – Though they’ve been around for years, Health Care Sharing Ministries have grown significantly in the last three years because members qualify for an exemption from the ACA’s individual mandate. If the mandate goes away, one might naturally expect membership to shrink to pre-ACA levels, but we’re not so sure.

While sharing ministries are not considered “insurance,” they do provide some protection against high medical bills. For people who are having trouble paying ever-increasing insurance premiums, sharing ministries might provide an alternative worth considering. If so, members will need additional protections like those we’ve already discussed to fill in the gaps.

Other Opportunities

Of course, there are opportunities outside of the individual market. For instance, we’ve written considerably about the opportunity in the Medicare market. The number of people with Medicare continues to increase, which means there’s a huge opportunity to offer these folks Medicare Advantage plans, Medicare Part D prescription drug plans, and Medicare Supplements. And guess what… Medicare wasn’t significantly affected by the Affordable Care Act and may not be significantly impacted by the American Health Care Act.

It’s also important to understand that employer coverage is not expected to change significantly if the ACA is repealed. While the individual market gets a lot of attention, most Americans get their insurance through their employers. There has long been an opportunity to sell core and ancillary benefits to employer groups, and there will continue to be an opportunity no matter what happens with the health law.

Finally, to the extent that millions of Americans actually do lose health insurance under the AHCA, this opens up opportunities for other coverage. Yes, some of the solutions we’ve already discussed can help to provide at least some protection against medical expenses. After that money is spent, though, any additional funds that your clients have available can be used to purchase non-health coverage that they may not have had money for in the past. Examples include life and AD&D insurance, dental insurance, and vision insurance. All of these meet needs that most of your clients have, but often people prioritize health insurance over these other lines of coverage. If they forego medical insurance and find a less comprehensive but lower cost solution, they might use the savings to purchase these other protections.

Summing Up

In conclusion, nobody wants to see people lose their health coverage, and we’ll stop short of saying that the potential changes will be a windfall for agents. Our point is this: no matter what happens, people will need advice and affordable solutions. Agents can certainly help clients make the best possible choice from the options that are available. For that reason, no matter what’s happening in the market, there’s always an opportunity to grow your business; you just have to be willing to adapt. At AHCP, we’d like to help you do that.