The federal healthcare law -- Obamacare -- establishes and funds organizations known as Navigators which are required to help consumers select and enroll in health insurance. On August 15, the Department of Health and Human Services announces its first grants to Navigators -- $54 million to Navigators in 33 states.
Unlike insurance agents, Navigators receive no compensation from any insurance company and thus have no economic incentive to recommend any particular policy.
Navigators can therefore be of great benefit to consumers. And because their efforts will result in more people buying insurance, they can also benefit insurance companies.
Navigators do not, however, benefit insurance agents. To the contrary, despite the frequent statements from both the government and insurance companies about the value of insurance agents in the new health insurance system, Navigators make agents unnecessary.
To be sure, the new rules Obamacare imposes on insurance companies -- even without the establishment and funding of Navigators -- will reduce the need for insurance agents. Because the law establishes websites in each state -- the Exchanges -- on which insurers must sell the same benefit packages, or at least benefit packages of the same value, it enables consumers to make apples-to-apples price comparisons. Because it requires insurers to accept anyone who applies regardless of health status, and prohibits them from charging people more based on health status, it enables people to buy from the company of their choice. Perhaps most important, the law allows people to get the information they need and compare price on-line, and to actually buy on-line.
In this system, agents can still help people select and enroll in insurance. But the health reform law authorizes Navigators to do both, and health advocacy groups already do both.
To hamstring their competition, therefore, insurance agents have persuaded legislatures in more than a dozen states, including Florida, Ohio and Missouri, to enact laws limiting the role of anyone who helps people with insurance who is not an insurance agent -- including not only Navigators but also public-interest groups who currently educate people about insurance, and even private individuals who assist other individuals.
These laws accomplish those goals in three basic ways. First, they make it very difficult for anyone to be licensed as a Navigator. For example, they establish burdensome examination, training, and continuing education requirements for Navigators; allow the state to impose unlimited fees on them; give the Commissioner unlimited discretion to penalize them; and allow the Commissioner unlimited access to their books and records.
Second, they provide that even if an individual or entity is licensed as a Navigator, it can't do what the federal law requires Navigators to do. For example, some states prohibit Navigators from telling consumers that one policy is better than another, or even telling consumers about the benefits of a particular plan without comparing it to another plan. Other states prohibit Navigators from offering advice about plans not sold on the new Exchanges. Some even go so far as to require Navigators to discontinue helping any individual who they learn has bought insurance from an agent -- in that case they must tell the consumer that he should consult with his agent. All these provisions prevent Navigators from distributing fair and impartial information to consumers and from facilitating enrollment in health insurance, which is what they must do under federal law.
Third, some state laws prohibit any entity not receiving federal funding from doing anything the federal law authorizes Navigators to do. Those laws would prevent public interest and health advocacy groups whose purposes include helping people choose and buy health insurance from continuing to do so. More troubling still, those laws would prevent private citizens from helping friends and family enroll through the Exchanges. If they did, they could be fined.
The open enrollment period for the new Exchanges is scheduled to begin October 1 of this year. Navigators are supposed to be able to help consumers with the selection and enrollment process at that time. Unfortunately, in the states that have enacted these anti-Navigator laws, it looks like they're not going to make the deadline, unless Navigators or public-interest groups challenge them in court and courts enjoin them.
And these laws should be enjoined. States can impose additional requirements on Navigators, but they can't impose requirements that conflict with federal requirements. And when the federal government requires Navigators to help consumers select and enroll in health insurance and a state prohibits them from doing so, that's a pretty clear conflict.