Pressured by Tea Party advocates, 32 states representing 63 percent of the American population have opted not to implement a state-run exchange. Instead, they will allow the federal government to set up and run the exchanges, without any state input.
In practical terms, this means that health care providers will play the dominant role in crafting the look and feel of these exchanges, increasing the likelihood that providers will be able to establish direct relationships with their customers. In other words, bypassing agents.
Americans for Limited Government, which is financed by reactionaries, praised the decisions of those states, whose leadership they intimidated through huge campaign donations directed by campaign finance organizations created by right-wing groups.
These states are to be "praised," ALG president Bill Wilson said.
They include such large states with sizeable agent populations as Florida, Georgia, Missouri and Pennsylvania. Virginia and Wisconsin, too, opted out, as did Louisiana, which has the highest ratio of uninsured residents in the country.
The thinking of their leadership is that this will allow "job creators" to challenge the authority of the federal government to issue insurance subsidies and enforce the employer mandate.Analysts, however, disagree. They don't think there is a high likelihood that the courts will support such legal theories, implying instead that it increases the ability of providers to reach out directly to customers, reducing their distribution and marketing costs by eliminating agents.
Technology is already allowing insurance companies in the life/health and P&C insurance business to reduce their distribution costs.
The business model of GEICO and Progressive, for example, is already forcing major P&C insurers to reduce the role that agents play in selling P&C insurance.
And, life insurers are also turning to the Internet to sell term life insurance, and the number of providers for this product who deal only through the Internet—despite industry surveys that insist people want to buy life insurance through a face-to-face transaction—is proliferating.
At the same time, hospital systems throughout the country plan to use the emerging exchange system to broaden their market share.
