This is part three of a 6 part series on the subtle changes to our society from the new Obamacare plans, and how Obamacare will be the primary tool the State uses to break down America and capitalism into a socialist state.

Health insurance marketing is changing too, in the face of Obamacare looming in the marketplace. How and what products are being offered can make a radical difference on structuring insurance protection in this market.

III. Marketing of Products

With the ever changing face of how brokers are compensated in the health insurance market, the average broker now may be forced to advertise and market products that may or may not be to the best interests of the client.

The cuts to profit margins of health insurance companies naturally mean that the industry must make changes on how agents and brokers are compensated and how its products are marketed. This not only affects health insurance, but other products that are also offered such as life and property insurance which in many cases is tied in with health insurance in a client’s product portfolio.

Insurance companies now have cut commissions drastically to the average broker, despite some rules changes that exclude ordinary compensation from Obamacare’s profit guidelines. Whereas the typical health insurance product used to pay 6-10%, now most carriers are going to a tighter schedule of 1-3%.

That is unless the broker is a heavy carrier of its products.

For example, some carriers are now going to a volume model, where the broker is compensated substantially higher commissions if they turn in more business. A broker might get compensated 1-3% for selling a few dozen policies through a carrier, but now they might get 5-7% for moving a few hundred. Move a few thousand and it might go back to the old 6-10% schedule.

This hurts the smaller brokers the most, since now they are faced with a choice. Either take a substantial cut in pay or reduce the variety of products they offer their clients, thus narrowing the field that a client might be shown in a typical presentation. It might also mean that an independent broker may be forced to sign with a large brokerage house in order to keep their income level—or working in a cubicle as essentially a phone salesman instead as an advisor and consultant to their clients.

It is a shift from a quality based model to a quantity based model, and that bode poorly for a client that may be used to a higher level of service. Brokers, due to rules changes and commission schedules, now will only deal with clients if a problem arises or a complaint crops up rather than being proactive and doing annual reviews. Time and pay commitments force this on otherwise service oriented brokerages. Health insurance now becomes a transactional relationship rather than an advisory relationship.

It would be the same as skipping doctor visits until you are in the ER.

Worse, brokers now may be turning to more profitable and problematic products like guaranteed issue life insurance and Medicare supplement policies in order to make ends meet. They may also branch out into final expense plans, dental plans and other low cost, high profit plans that do little except to fund insurance companies growing need for profits.

Take for example a guaranteed issue life insurance policy. Most run about 9.95 per unit (a unit being 1000 dollars of coverage) per month. Sounds good on the surface of course,  the policy has no medical or physical requirements other than not being in a hospital on death’s door for up to 25,000 dollars of coverage in order to pay for final expenses. There’s a reason why you see non-stop commercials on TV now.

Do the math on it and you’ll see it’s a low return policy. A 10k policy would cost about 120 bucks per month when you figure in policy expenses and fees.  That’s 1200 bucks per year and the policy does not pay in the first two years. You’ll be 2400 bucks in before coverage actually begins—and then in 5-6 years, you could have invested that money and probably made the 10k death benefit. Unless you die in years 2-6 you actually lose money on the plan.

But hey, it pays a lot of commission and makes people feel good about how easy it is to get.  And people buy it all the time, instead of planning ahead and buying proper policy coverage years ago. An easy sale makes ends meet for most brokers now. Dental insurance works about the same way; most guaranteed issue policies of any sort do. They have to in order to prevent the insurance company from going out of business from paying out too many claims higher than the premiums collected.

Funny thing though-- that is exactly how Obamacare is going to work for health insurance products  after 2014.

Continuation of this 6 part series on why Obamacare is the greatest threat to American society since its inception will be in Thomas Purcell's newest 99 cent e-book “Obamacare and the Insurance Industry” to be released on Amazon next month. It is part of Mr. Purcell’s next book “More of The Conservative Chronicles”.

Look for it at Amazon.com or get a link here later next month.