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Brokers Eye Possible $360 Mil Annual Covered California Market

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California insurance brokers are eying a possible $360 million-a-year market, after the Obama administration’s surprise decision to let them sell government-subsidized health insurance under the Affordable Care Act (ACA).

Under rules proposed on March 12 by the United States Department of Health and Human Services (HHS), state exchanges may pay brokers’ commissions for the sale of subsidized health insurance plans within the exchange.

The size of the potential market is uncertain. Covered California probably won’t allow brokers to earn large commissions off sales of government-subsidized health care. A conservative figure might be $15 per person per month. At that rate, if private brokers enrolled all 2 million subsidized people expected to buy through the California Health Benefit Exchange, the brokers’ take would reach $360 million annually.

“A $15 commission seems optimistic for subsidized coverage”, said Robert Coolbrith, an analyst for the investment advisory firm ThinkEquity LLC in San Francisco. “There are some potential positives in terms of enlarging the opportunity to enroll people, but there are still lots of uncertainties,” Coolbrith said.

Consumer groups voiced dismay over the HHS rules, “The whole point of a public exchange is to create a consumer-friendly marketplace where people have the ability to make informed choices,” said Ethan Rome, executive director of Health Care for America Now, a labor-backed group in Washington.”

However, “the new rules were crafted to protect consumers while giving states the flexibility to design these marketplaces so they work well for their markets,” said Brian Chiglinsky, a spokesman for the federal Centers for Medicare and Medicaid Services (CMS). “Each state gets the final say on whether to include brokers in the system.”

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