Jon Rauser of The Rauser Agency, an insurance broker, senses an opportunity in the Affordable Care Act.
The law is expected to increase the demand for insurance sold directly to individuals and families, many of whom will be eligible for tax credits to help offset the cost. Rauser is betting that more than a few people will want help sorting through their options and picking a health plan.
The Rauser Agency, which specializes in selling health insurance to small employers, has opened two storefront locations — one in downtown Milwaukee, the other in Mequon — to reach that market.
“I am absolutely having great fun making lemonade out of lemons,” Rauser said.
UnitedHealth Group Inc., the parent of UnitedHealthcare, has used storefront offices to sell Medicare Advantage plans. And other insurance companies open kiosks at shopping malls to sell their plans during the annual open enrollment period.
Many brokers sell insurance directly to individuals and families, but relatively few focus on that part of the market.
That segment of the health insurance market is relatively small. Estimates range from 10 million to 19 million people, compared with more than 150 million people who get health insurance through an employer.
But the market could more than double in the future because of the Affordable Care Act. Many people will turn to brokers and agents to help them understand deductibles, co-insurance, networks, prescription drug plans and other health insurance details.
“It’s complicated, and it continues to be complicated,” said David Romoser, a board member of Siebert Lutheran Foundation, a client of the Rauser Agency.
Romoser recently referred two employees of Serenity Inn, a nonprofit organization that the foundation helps support, to the agency. The employees spent two hours with Chris McArdle going through health plans.
“Chris McArdle’s patience and insight was invaluable,” Romoser said.
Both people qualified for tax credits to help offset the cost, and ended up with better coverage at a lower cost, he said.
The Rauser Agency has sold supplemental insurance for people covered by Medicare, as a service for its clients and as an additional source of revenue, Rauser said. It also occasionally sold individual policies, typically to people who were self-employed.
The Affordable Care Act will make it easier to sell those policies by prohibiting insurers from turning away people with pre-existing health problems, eliminating the frustration of having an insurance company reject an application.
“Now at least we have a pretty good certainty of making a sale,” Rauser said.
The requirement that everyone have health insurance or pay a penalty is likely to increase the size of the potential market. The penalty is relatively small next year — 1% of family income or a minimum of $95 — but increases to 2.5% of income in 2016.
At the same time, health insurers reduced commissions on policies sold to individuals and families in recent years, after the Affordable Care Act required that at least 80 cents of each dollar in premiums be spent on medical claims.
Other insurance brokers and agents also are likely to put more focus on the market for individual insurance in coming years.
Rauser will continue to sell health insurance to small employers, and he expects his existing clients to continue to offer health benefits to their employees.
His new strategy also is a hedge: Selling 12 policies to individuals and families a week is the equivalent of adding a small business as a client each week.
He hopes eventually to open storefronts to the south and west of the Milwaukee metropolitan area.
“I want to be between the Walgreens and the Pick ‘n Save,” Rauser said.