David highlighted in NPR Article
Insurers Hand Out Cash and Gifts to Sway Brokers Who Sell Employer Helath Plans
The pitches to the health insurance brokers are tantalizing.
“Set sail for Bermuda,” says insurance giant Cigna, offering top-selling brokers five days at one of the island’s luxury resorts.
Health Net of California’s pitch is not subtle: A smiling woman in a business suit rides a giant $100 bill like it’s a surfboard. “Sell more, enroll more, get paid more!” In some cases, its ad says, a broker can “power up” the bonus to $150,000 per employer group.
When brokers are paid directly by employers, the results can be mutually beneficial. In 2017, David Contorno, the broker for Palmer Johnson Power Systems, a heavy-equipment distribution company in Madison, Wis., saved the firm so much money while also improving coverage that Palmer Johnson took all 120 employees on an all-expenses paid trip to Vail, Colo., where they rode four-wheelers and went whitewater rafting. In 2018, the company saved money again and rewarded each employee with a health care “dividend” of about $700.
Contorno was not being altruistic. He earned a flat fee, plus a bonus based on how much the plan saved, with the total equal to roughly what he would have made otherwise.
Craig Parsons, who owns Palmer Johnson, says the new payment arrangement puts pressure on the broker to prevent overspending. His previous broker, he says, didn’t have any real incentive to help him reduce costs. “We didn’t have an advocate,” he says. “We didn’t have someone truly watching out for our best interests.” (The former broker acknowledged there were some issues but said it had provided a valuable service.)