First look at health insurance reforms has brokers in a sweat

June 16, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

A photograph in the Business section yesterday taken at Kelly-Chick & Associates Inc. misidentified two of the people. Bryan Kelly was at left and John Kelly was at right.

The brokers at Kelly-Chick & Associates Inc. have been preparing their customers for the coming of health insurance reform for six months by letter, phone and personal contact.

But when the company staff assembled a few days ago for a first glimpse of products and prices offered by Blue Cross and Blue Shield of Maryland, sweat poured from their brows. And it wasn't only because the air conditioning malfunctioned, leaving 30 people in a steamy conference room.


With two weeks to go before a new health care reform law takes effect in Maryland, Kelly-Chick is just now learning the prices and options on at least a dozen new products aimed at the state's 45,000 small businesses.

This week, it has to turn around and explain them to hundreds of its customers who are facing a July 1 deadline to decide whether to buy the new policies. It also is taking the word to 100 independent brokers along with repackaged information about products from both major insurance players -- and others as they are approved by state regulators.

"We've been waiting for this day for the past three months," said Frank Kelly III, president of the Hunt Valley-based company, referring to a regulatory delay in approving new policies.

Kelly-Chick has about $20 million in annual business with Blue Cross and 80 percent of its 2,000 customers are small businesses.

Its big worry is how to keep clients whose premiums are expected to rise after the introduction of a standard set of health benefits for small businesses.

The reform was intended to make health insurance accessible to more people. But initially, some of the healthier groups could see premiums as much as double. At the same time, many people could also find themselves paying more for doctor visits or lab services.

For firms like Kelly-Chick, how they handle the transition could make or break a business built largely on its ability to win lower insurance rates for its customers by assembling small groups into larger pools, many of them trade associations.

But the July 1 reform requires insurers to charge the same price to all small businesses. As a result, Kelly-Chick will rely more on its reputation for service, including such features as collecting premiums and handling administrative matters for customers.

For the moment, the firm's concern primarily is getting the word out -- and crunching numbers to see how Blue Cross' rates compare with those offered by its largest competitor, Mid Atlantic Medical Services Inc.

"I'm worried about communicating this to 200 to 300 clients," Mr. Kelly said.

On Friday, Kelly-Chick served as an industry guinea pig. In a crash course with Blue Cross sales manager Robert Hallock, the Kelly-Chick sales team peppered him with questions, pointed up loopholes in the new state law, and wondered how they will get clients to pay more for less benefits.

Small businesses can buy the standard benefits package in a managed-care product, such as a health maintenance organization, or in traditional insurance plans that permit a broader choice of doctors or hospitals. The Blues are offering nine different policies that include the standard benefits.

"Oh boy," said the company's vice president for sales, John R. Kelly, Frank Kelly's brother, when he got a look at the possible options. "Our whole sales approach is going to be different."

Mr. Hallock, his suit jacket still on, seemed the only one staying cool. He suggested offering customers two choices: the standard benefit package that is required by law and another with extra benefits comparable to the customer's existing plan.

As questions from sales agents revealed, there are some kinks in the law and differences in the way companies interpret it.

For example: A company could cover sick people in the group plan and buy less expensive individual policies for healthy employees.

"That is real dumb. Not smart," John Kelly said. Frank Kelly added, "It is going to drive up costs."

Mr. Hallock of Blue Cross agreed, but offered some hope: "Individual market reform is around the corner, but it is going to be a long year."

In the meantime, Kelly-Chick needs a strategy to deal with upset customers. At the very least, said Mr. Kelly, it will include brokers telling customers, "We're the messenger, don't kill the messenger."

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