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HEALTH CARE–Insurance Deals Appeal More to Firms Than Brokers

Brokers Were Notified of

A Reduced Brokerage

Fee Late Last Year

PacifiCare Health Systems Inc. announced its new strategy to sell health insurance policies at discounted prices to small employers in California and reduced brokers fees.

PacifiCare’s new Premier plan offers businesses with two to 50 employees health insurance at 10 percent to 12 percent below its traditional plans, reflecting the lower cost of doing business online.

Premier products include health maintenance organizations, preferred provider organizations, point-of-service-plans and group-life plans.

PacifiCare hopes Premier will be an attractive money-saving alternative to traditional plans for California’s 1 million small businesses.

San Diego has a total of 70,531 small businesses, according to the California Employment Development Department.

PacifiCare currently has policies with 2,000 San Diego-based employer groups comprising 34,200 members, said Cheryl Brady, a spokeswoman for PacifiCare.

Brady said it’s too early to say if Premier will attract more small businesses in San Diego, but said optimistically “the new products are very compelling.”

For brokers, in turn, the new product may be less compelling. Brokers can sell the discounted plan to small businesses, but at a reduced flat rate of 3 percent vs. 10 percent for PacifiCare’s traditional plans.

Brady admitted the discounted fees has made some brokers “upset.” Others are “adapting to the new technology.”

She said brokers were notified of the reduced brokerage fee in November.

But, “The change and the commission structure wasn’t communicated very well,” said Tim Buzbee, vice president of Coordinated Benefits Corp., a brokerage group for small employers in Mission Valley.

As a result of the miscommunication, brokers are pretty upset, he said.

Typically, brokers act as a liaison between employers and insurers.

PacifiCare’s discounted plan allows employers to go online and buy insurance directly or through a broker.

But, for many brokers, the low commission is too low to provide a profit, Buzbee said.

He foresees some backlash by brokers.

“Brokers may choose not to quote them (PacifiCare) as their vendors,” Buzbee said. Brokers may also ask employers who want to sign up with PacifiCare to pay a consulting fee to make it worth their while, he added.

Brady said PacifiCare remains committed to brokers, considering they sell the majority of PacifiCare plans to small businesses.

She looks at it as “another line of products they can sell.”

PacifiCare has also struck agreements with two online companies, ehealthinsurance.com and insweb.com, to offer the Premier plan, Brady said.

Buzbee however, strongly advises small employers not to buy insurance on the Internet without consulting a broker.

“I am concerned in regards to them (small businesses) buying (group insurance),” he said. “There are a lot of things in insurance contracts employers don’t understand.”

Brokers can shop around for the best prices and know what to look for in comparing different health plans, he said.

“They (brokers) try to make sure the client is covered with the proper coverage and have full knowledge in what they are buying and can ask questions,” he said.

The Central California Association of Health Underwriters in Fresno did not return repeated phone calls.

– – –

Feeling Young, Healthy: San Diego’s health club chain 24-Hour Fitness is holding a special seminar at 7 p.m. Feb. 15 at its Mission Valley facility on staying healthy, feeling better and looking younger.

Dr. John K. Gerard, medical director of NuLife Medical Center in La Mesa, will present his views on “anti-aging” , the baby boomer buzzword of the new year.

“People age because their hormone levels decline,” 24-Hour Fitness reported.

Gerard will explain how to beat this natural rhythm of the body safely.

Admission to the seminar is free.

Webb’s health care column runs monthly. She may be reached at (mwebb@sdbj.com).

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