Health Insurance for Musicians? – An Innovative Austin Program

Austin enjoys the self-promoted but well-deserved reputation as live music capital of the world. In recent years, the city has decided to put its money where its mouth is to ensure that it stays that way. One of the most innovative and socially progressive ways it is doing that is by providing an insurance program for working musicians through HAAM, or Health Alliance for Austin Musicians.

It’s a unique concept. Besides New Orleans, Austin is the only city in the US to provide such comprehensive health care to its local musicians.

“This city loves those who make music for us all,” according to Betty Dunkerley, Austin Mayor Pro Tem and HAAM board member. “What better way than Health Alliance for Austin Musicians is there to show our appreciation? HAAM makes members’ lives better.”

HAAM was created in 2005 as a result of a partnership between local hospitals and the SIMS foundation with support from the city and various Austin businesses. They recognized the tremendous need that existed in the community of musicians in the city for affordable health care. More than 8,000 working musicians live in Austin and most of them are uninsured. Rather than wait for the federal or state government to come up with a plan to help the millions of Americans who do not have health insurance, this community of musicians and their supporters decided to provide that help themselves.

Funding for the organization is provided by business and private donations and various grants. The HAAM benefit day every October mobilizes musicians, local businesses and city officials to raise money for the organization. In 2006 they raised more than $107,000, and more than $180,000 in 2007. Other events throughout the year, such as Austin music backer Nancy Coplin’s BIG SIX-O birthday party recently, donate their proceeds to HAAM as well. Of course, interested supporters may also donate money at any time through the HAAM.

HAAM’s 2007 annual report reveals nearly 4,900 medical, dental and mental health visits which earned a 94 percent approval rating from member-musicians. This success results from a one-of-a-kind collaboration among the Seton Family of Hospitals (clinic visits, prescriptions, hospital services and specialist referrals), St. David’s Community Health Foundation Leadership (dental visits) and The SIMS Foundation (counseling, psychiatric and addiction-recovery sessions).

Membership in 2007 grew to 929 of which 65 percent were age 40 and younger, with 67 percent earning less than $15,000 a year. To receive the benefits from the program, members must live in Travis County and be able to prove that they earn money playing music. For many services, members must pay a small co-pay; some other services are provided for free.

The SIMS foundation was named after Austin musician Sims Ellison who lost a long battle with depression and committed suicide in 1995. His death shocked the Austin community and a group of family and friends decided to create the SIMS foundation to provide low-cost counseling, psychiatric and addiction recovery service to musicians who needed it. The foundation provided more than 2,300 such sessions in 2007.

In addition, through HAAM, more than 573 members made more than 1,300 clinic visits that same year and benefitted from more than 500 hospital services of various kinds as well. Many members also took advantage of the free dental services provided by the organization.

Almost all members are very positive about the work HAAM is doing and the services it provides. Guy Forsyth is an Austin musician who has built up quite a reputation throughout Texas.

“It makes me really happy for younger musicians who are coming up and for parents who may have a child who’s very talented and it’s scary to think of them becoming an artist. Because we see all these examples around us of people, who aren’t part of a corporate structure are left behind in terms of health care and public support,” Forsyth said.

What We Do (and Don’t) Know About Health Insurance Exchanges

The rules around health insurance exchanges are dynamic and evolving all the time. Some agents fear these exchanges could displace us-in the way Travelocity displaced many travel agents. Others argue that because health insurance is a far more complicated purchase than an airline ticket, and because consumers are likely to be confused by these new channels, our expertise and advice will be even more crucial.

Hopefully, the role of agents will become clearer as time goes on. In the meantime, here’s an overview about what we do-and don’t-know about health insurance exchanges.

Health Insurance Exchange: A Definition

A health insurance exchange is an online marketplace where individuals and small businesses can shop for, compare and purchase health insurance. Think of it as an Expedia or Travelocity for health insurance. No one is required to use an exchange; it is an additional channel being added to the marketplace.

Some states, including Colorado, where Alliance Insurance Group is based, are taking the initiative to build their own exchanges, which are permitted by federal law but subject to certain guidelines. States that choose not to create their own exchanges by 2014 will be required to use the federal exchange.

States building their own exchanges typically cite the desire to control their own destiny and customize their exchange to the needs of the local population. States that have rejected exchange proposals often mention their reluctance to support any aspect of the federal reform bill, which they hope will be repealed by the Supreme Court.

In general, insurance exchanges allow consumers and small businesses to:

Shop for and compare health plans, which must include certain standardized benefits.
Determine eligibility for premium relief in the form of tax credits.
Call or sit down with someone who can help explain various benefits and plan features.
Enroll in a plan.

Following are some of the most relevant aspects of the health insurance exchanges for independent insurance agents.

Consumer Access to Agents

The National Association of Health Underwriters (NAHU) is lobbying for the inclusion of an agent-contact option within the exchanges’ online systems. This could be structured similarly to the national Web-based portal for home sales, which presents listing information in a standardized format, but also connects potential homebuyers with a state-licensed realtor.

Importance of Certification

NAHU also believes all agents participating in the exchanges should be required to pass an annual exam that addresses private coverage, public assistance and subsidy-eligible options to ensure familiarity with all coverage choices available to consumers. This knowledge is important for agents as well as individuals filling the new role of “healthcare navigator.” Navigators will receive federal funding to help educate the public, distribute information about enrollment and premium credits, and provide enrollment assistance. NAHU believes navigators duplicate the role of licensed agents and questions the wisdom of spending federal money on these positions. But if navigators are used, they should be subject to the same rigorous licensing and continuing education requirements as agents.

Marketing and Commission Limits

There has been talk of restricting agents’ marketing activities and commissions related to their activity within the exchanges, which NAHU strongly opposes. The rationale is that the precedent for such constraints-Medicare Advantage-does not apply here at all. For the under-65 and small-business health insurance markets, prospective clients often want agents to provide additional information about life, dental, disability and other elements of the typical employee benefits package, within a single meeting.

With regard to commissions, we believe these should be determined by private health insurers, as they are today. That said, health plans have already begun cutting commissions in response to other aspects of healthcare reform, such as administrative vs. medical-loss-ratio requirements. The best insulation from commission cuts is to join forces with a Managing General Agency (MGA) that can consolidate the sales activity of many agents, guaranteeing insurers a high volume of business.

Will Exchanges Really Help?

It’s safe to say that “the jury is out” on this matter.

Will exchanges lower premiums? The answer depends largely on how the risk pools are structured. Some argue that separate pools for individuals vs. small businesses are fairest, as premiums more accurately reflect the risks of these two very different markets. Others say combining the pools would allow risk to be spread across a larger base, facilitating lower prices for all.

Will the exchanges improve the overall health of the population? The hope is that, among other things, costly emergency room visits will decline once a larger percentage of citizens are covered. Others counter that those with low-benefit/high-deductible plans are also reluctant to seek preventive care or even acute care until absolutely necessary. Will exchanges improve the healthcare purchasing experience? Possibly. In theory, lining up benefits “apples to apples” should make shopping easier-as long as it doesn’t result in slew of indistinguishable, look-alike plans that blur together and further confuse the consumer.