When it comes to Nevada’s health insurance marketplace, brokers play a crucial role.

But many of these licensed professionals — whose job it is to help clients find and compare insurance coverage — are now publicly and privately sharing concerns about the state’s new public health option. Created in 2021, the plans are designed as a way to make coverage more affordable and are finally available this year.

Because state law requires premium costs on these public option plans to decrease by 15 percent over the next four years, many insurance carriers who offer the policies — referred to as Battle Born State Plans — opted to reduce costs by cutting broker fees and commissions, instead of cutting reimbursements to providers or finding other ways to save on overhead, such as executive salaries or other administrative costs.

There are roughly 35,000 people projected to purchase the plans, representing about 31 percent of those who are enrolled in health coverage through the state’s Affordable Care Act marketplace, Nevada Health Link.

That could be a problem for the 765 brokers certified by the state insurance marketplace, who primarily make money through commissions paid by insurance companies on the policies they sell and renew.

At least one broker has said he’s not going to offer the new plans to clients over concerns that the plans could create financial problems for insurers and do not provide the same level or quality of offerings as other alternative plans on Nevada Health Link because of how the new networks are set up — a worry other brokers also expressed.

“I'm simply not going to offer them, and if a client asks me about them, I'm going to sit the client down and I'm going to explain exactly what I just explained right now,” said Christian Durante, who is predominantly a commercial insurance agent but has sold life and health insurance since 2001. “So no, we're not going to actively represent these plans to our clients.”

Durante told The Nevada Independent that the Battle Born State Plans are detrimental to insurers, who are already operating on razor-thin margins, and said the new plans are “inferior” to other plans available on Nevada Health Link when it comes to service offerings and access to providers.

He said he worries that if the insurers offering the plans become financially insolvent, that will mean his clients will lose insurance and ultimately create a broader network of problems for them and Nevada’s health system.

State officials said that there’s little evidence that supporting the Battle Born State Plans will cause carriers to be insolvent, because major insurance carriers are offering the plans. 

If the state plans go under for some reason (such as when Friday Health plans folded), that would mean all plans offered by that insurer would go under, which is highly unlikely.

At an open enrollment event in Southern Nevada on Oct. 2, insurance brokers and agents expressed frustrations about low or no commissions on the plans and raised fears of a class action lawsuit from clients who do not feel like they were given a complete understanding of the new options.

“How will the brokers be encouraged to sell the Battle Born State Plans, when they're not earning from it?” asked Joy Avendano, who works as an insurance navigator with the Asian Community Development Council and as a navigator doesn’t make commissions off insurance sales. “They will not be compensated.”

Another insurance broker, Erika Sanchez, said at the event that combined with people who may cancel their insurance because of rising costs, the lack of commissions from carriers offering the public option plans presents challenges to their industry.

“The panic is for us because we’re not going to have income,” Sanchez said.

Senate Majority Leader Nicole Cannizzaro (D-Las Vegas), who sponsored the original 2021 bill creating the public option plan, told The Nevada Independent that she wants brokers to be partners in this process. 

“I don't think insurance carriers should undercompensate brokers for selling these plans,” she said. “However, brokers also have a duty to operate in the best interest of the consumer.”

She added that overall costs in the individual market will be addressed by a reinsurance program implemented as part of the public option that will help insurers deal with some of the most expensive claims. The reinsurance program has been touted as a way to help stabilize the insurance market.

The Battle Born State Plans, she said, do not sacrifice standards of care. Health officials with the state of Nevada have noted that the new plans are “qualified health plans” and cover all 10 essential health benefits stipulated under the Affordable Care Act, including guaranteeing that consumers will not be denied coverage or charged more for pre-existing health conditions.

Cannizzaro, who is running for attorney general, said that any failure of carriers or brokers to live up to their duties under the law is something she will continue to monitor both as a legislator and potentially as attorney general.

If Republican Gov. Joe Lombardo’s administration has reason to believe that brokers are misleading consumers or intentionally steering people towards more expensive plans, she said the Division of Insurance — which licenses brokers — should conduct a full investigation.

State law and threats of lawsuits

Under state law, insurance brokers and agents have a duty to act in the best interest of their clients when recommending coverage, meaning that consumers must be provided with accurate, complete and objective information about available insurance options — without regard to the broker’s or agent’s own compensation or business interests.

Violations, the law states, can lead to penalties, fines or even the loss of a license to sell insurance. 

Nevada Health Link also mandates brokers to sign a code of conduct requiring them to “act in the best interest of Nevada Health Link consumers, which includes assisting consumers to enroll in coverage that optimizes savings and affordability, providing transparent and relevant information, and providing meaningful consumer choice.”

Asked about hesitation or outright refusal by brokers to recommend public option plans, Jennifer Krupp, administrator for the Division of Consumer Services under the Nevada Health Authority, pointed to the code of conduct as an agreement brokers and agents are required to abide by. 

“Brokers and agents agree they will not mislead or confuse consumers, or misrepresent Nevada Health Link, its carrier partners, or their products or plans,” Krupp said. “If an agent or broker is found to be in violation of the Code of Conduct, Nevada Health Link may terminate their certification, remove them from the website, and report them to the Division of Insurance, as appropriate.”

Melody Mojica, an agent and insurance broker, said at the open enrollment event in early October that many brokers are upset because they will not be paid for the public option plans.

“A lot of the brokers that we have been in contact with and talking to, don’t want to [offer these plans] … there’s pushback,” she said. 

Mojica also said the new plans may not be in clients’ best interest because the plans have a smaller network offering limited options. 

But state officials have said the plans — which will be offered statewide — will expand options for Nevadans in rural areas, where insurance coverage has historically been limited and there are fewer providers to contract with. 

They also have emphasized that all the plans — including the public option plans — are certified health plans that meet network requirements and that the characterization of a narrower network is not accurate.

Durante said he knows he may be asking for trouble by not recommending the plans to clients.

“I am doing it because I see these plans as dangerous to the carriers, and if I contribute to the collapse of the carrier, I am not helping any of my clients,” Durante said. “If these policies make carriers go insolvent, if they damage the carriers the next year, what happens? They can't pay claims, they have problems.”

Durante said insurance companies have already been liquidated in Nevada under current market conditions, and he doesn’t want to contribute to the loss of more. He said his approach is his alone, and he has not instructed other agents on his team to follow suit.

His comments echo criticism of the public option plan from the health care industry that the public option could exacerbate Nevada’s health care shortage and destabilize the broader insurance market. 

Though Lombardo had taken a similar position in the past, his administration adopted a reinsurance program as part of the implementation of the plans. He said the program will stabilize the venture by reinvesting federal dollars back into the insurance market.

If his position results in a lawsuit, Durante said he’s already discussed potential responses with an attorney.

“We are in a situation where if we don't do it, [offer the plan], we have the threat of lawsuit against us. If we do do it, we literally get no compensation for work offered,” Durante said. “It was the state that forced us into that position. So, I'm not trying to pick a fight. At the same time, it's not good for the carriers, it's not good for the clients, and it's really not good for us.”