Introduction

President Barack Obama reaches for a pen to sign the health care bill in the East Room of the White House in Washington, March 2010. Charles Dharapak/AP

Key findings: The Affordable Care Act funds a network of “navigators” who will help consumers use the new online insurance marketplaces established by the law.

Insurance agents and brokers fear that navigators will compete with them, and have opposed their creation.

Agents and brokers have lobbied hard in statehouses for new laws regulating the navigators — a push aided by a legislators group supported with industry funds.

Over the past year-and-half, 16 states have passed new laws regarding navigators.

Agents and their legislative supporters say the new laws provide needed oversight; consumer advocates believe the laws could shackle the navigator program.

Early in the summer of 2009, when lawmakers were starting work on what would become the largest health care overhaul in decades, the industry associations that represent insurance agents and brokers caught wind of an obscure provision.

The plan called for state and federal governments to hire so-called “navigators” — members of social service organizations, advocacy groups, even chambers of commerce — to help people use the new online marketplaces created by the law to choose among insurance plans and enroll in coverage.

The navigator program garnered little attention in the midst of the larger legislative battle. But agents and brokers, worried that navigators would cut into their business, immediately took aim, labeling the initiative “reckless” and “ill-advised.”

When President Obama finally signed the law in March 2010, the Affordable Care Act did include a navigator program — but that hasn’t stopped insurance agents and brokers from fighting against it. Over the past three years, the groups have waged an intense but little-noticed lobbying effort to regulate navigators in the states, leading to the passage of 16 state laws over the past year and a half. Most of the laws contain language that closely resembles recommendations that agents and brokers have been pushing in statehouses nationwide — a push receiving crucial aid from a legislators’ group focused on insurance policy that is supported with industry funds.

Backers of the laws say they provide needed oversight of navigators by establishing state authority and common-sense regulations. But consumer advocates and some health policy experts warn that the laws could shackle the navigator program, meaning fewer people would have access to help.

Roots of a controversy

When states and the federal government launch the new insurance marketplaces, or “exchanges”, on October 1, one of their greatest challenges will be reaching the very people the marketplaces are meant to help. A June poll by the Kaiser Family Foundation found that 55 percent of uninsured Americans had never heard of the exchanges. Even those who have might not understand how to use them to buy insurance.

Enter the navigators. The federal law directs the exchanges in each state to fund these entities, who will act like travel guides for the online marketplaces. People will use the exchanges to select from a range of plans offered by various insurers while trying to determine whether they are eligible for new government subsidies. The navigators will also serve as marketers, spreading the word on the new exchanges.

Navigators will need connections to a range of communities, so any number of groups are eligible to apply for navigator slots, from churches and business groups to ranching and farming organizations. Each state must have at least one community-based group serve as a navigator, however, to help connect with hard-to-reach communities such as immigrants.

It’s not a new concept. When the Obama Administration and its congressional allies began work on the health reform law in 2009, they drew on similar navigator-like provisions that have been integral to previous health care initiatives like the Children’s Health Insurance Program, said Tricia Brooks, a senior fellow at the Center for Children and Families at Georgetown University.

The idea is that health care is complicated, so having someone walk you through the process helps.

But when insurance agents and brokers first learned of the plan, some saw the navigators as government-funded competition. For decades, agents have sold insurance to individuals and small businesses and helped them choose which plans might be right for them. Some work directly for insurers, but many are independent. When a customer buys a particular plan, the insurance company generally pays the broker a commission.

“When you create a class of people who are supposed to do many of the things that our guys already do, it begs the question of circles. Is there overlap? Are they separate?” asked Wes Bissett, senior counsel for government affairs at the Independent Insurance Agents and Brokers of America. “What are the activities the different groups will do?”

State Rep. Richard Smith, chairman of the House Insurance Committee in Georgia, and sponsor of a navigator bill there, said the laws are a matter of states’ rights.

“Insurance is one of those few items that the states regulate,” he said. “We want to make sure they meet our standards, not just the federal government’s standards.”

Insurance has long been the realm of states, and the final law gave control of the navigator program to the exchanges in each state. But in 34 states, including Georgia, the federal government will be running the exchange, at least in part. In those states, the U.S. Department of Health and Human Services will design the training and oversee certification of navigators (the law actually creates various navigator-like groups that go by several names but are often referred to together). The department’s final rules say even these states that are not running their own exchange can implement state regulations for navigators, so long as they don’t prevent implementation of the law.

And so in at least 19 states that are not running their own exchanges, lawmakers have introduced bills to do just that. Legislators — backed by agents and brokers — maintain that these laws simply establish state oversight and ensure that consumers will be protected from unscrupulous or uninformed navigators.

“We regulate lawyers, we regulate doctors, we regulate insurance brokers,” said state Sen. David Simmons, who sponsored the navigator bill in Florida, “because they have the ability to significantly impact the lives of consumers.”

Some lawmakers and regulators have said the federal navigator rules are insufficient to protect against scammers. Most of the state laws clarify that navigators cannot sell insurance or provide other services traditionally handled by agents and brokers, while establishing state-based certification programs and giving state insurance departments authority over navigators.

But consumer groups say most of the laws go too far and, in effect, make it more difficult for community organizations to become navigators. Many of the laws prevent navigators from advising clients about the details of insurance plans, which, depending on how that’s interpreted, may prevent them from doing their jobs.

“We know navigators can’t say, ‘This is the best plan for you,’ but what they should be able to say is, ‘Here are some of the things that should drive your decision,’ ” Brooks said. “ ‘Do you have a particular health condition where you’re taking medication? Maybe we should look at the formulary to see if the medication is covered.’ ”

Nearly all the new state laws require navigators to undergo training and certification that may, in many cases, come on top of training required by the federal government, often at the expense of the navigators.

“The navigator rules just make it more difficult for community groups to be navigators,” said Laura Goodhue, executive director of Florida Chain, a statewide consumer health advocacy group that applied for a navigator grant (the federal government is expected to announce recipients in mid-August). “The purpose of having navigators is to reach diverse communities. Making it harder for groups to do that just means people who are at a disadvantage already are going to have a harder time getting access to the marketplace.”

The Department of Health and Human Services has declined to weigh in on the individual state laws, saying in the final navigator rule that it will work with the states on the implementation of their laws.

“We recognize the importance of balancing consumer protection with the need for a sufficient supply of navigators,” said Joanne Peters, a spokeswoman for the department, in an email. “The federal navigator rule strikes this balance by allowing states to adopt state-specific standards for navigators, while prohibiting these standards from impeding application of the Affordable Care Act.”

A full-court press

At one of the first Senate hearings held on the Affordable Care Act, Janet Trautwein, executive vice president of the National Association of Health Underwriters, questioned the wisdom of a navigator program, telling the health committee that, “the role of the navigators is already played by agents [and] brokers.”

Along with the other major industry associations — the Independent Insurance Agents and Brokers of America, the National Association of Professional Insurance Agents and the National Association of Insurance and Financial Advisors — Trautwein’s group worked to kill or amend the navigator provision as the law wound its way through Congress. More than 1,000 members of these groups came to Capitol Hill in the summer of 2009 to lobby their representatives.

The groups did win language allowing agents and brokers to serve as navigators. But after lawmakers included the program in the final law, the agents and brokers turned their attention to the states. (At least mostly. In August, Rep. Cathy McMorris Rodgers, a Washington Republican, introduced a pair of bills to defund the navigator program unless additional rules are implemented.)

As part of their effort, the agent and broker associations have lobbied the National Association of Insurance Commissioners — the key group of state insurance regulators — to pass resolutions and issue white papers supportive of agents and brokers. The groups have issued recommendations for state regulation and have spread the recommendations by testifying and lobbying at state capitals, from Lincoln to Columbus.

The agent and broker associations have spent at least $683,000 on lobbying this year in the 15 states that passed navigators laws in 2013, as well as $62,010 spent last year in Iowa, where a similar law passed in 2012. (The true figure is likely far higher. Several states require lobbyists to report only spending ranges, and some disclose the amounts lobbyists spent on lawmakers but not their full compensation).

The associations also gave $7.5 million to state campaigns from 2010 through 2012, according to an analysis of data provided by the National Institute on Money in State Politics. The groups spent nearly two-thirds of that total, $4.8 million, in the 16 states that have passed the navigator laws.

And the agents and brokers also got help from an obscure group of state lawmakers called the National Conference of Insurance Legislators.

Spreading the word

Over the course of four days in early July, 63 state legislators converged at the Philadelphia Marriott Downtown, a hulking hotel cum micro-city of restaurants, convention halls and more than 1,300 rooms. The lawmakers were joined on the fifth floor by more than 200 lobbyists and other representatives of insurance companies, law firms and industry associations for the summer meeting of the National Conference of Insurance Legislators. NCOIL, as it’s known, was founded by a group of lawmakers in 1969 as a way to share information on insurance policy and to “re-affirm the traditional primacy of the States in the regulation of insurance.”

The lawmakers divide themselves into committees, which hold hearings, debate policy and pass resolutions and model laws. They attend seminars with titles like “The World of Annuities: Regulation, Consumer Protection and Taxation.” A small civilian staff runs the organization for the legislators, operating under an independent company in Troy, N.Y, called Nolan Associates. The staff — including Susan Nolan, who actually acts as NCOIL’s executive director — organizes three annual meetings and sends legislative alerts, weekly articles and occasional research reports to legislative members in 26 states.

Between hearings, the lawmakers mingle with industry representatives who pay between $525 and $875 to attend, thereby providing a large portion of the organization’s revenue, which was $672,125 in 2011, the last year for which data are available (lawmakers pay between $375 and $600 per meeting, and 26 “contributing” state legislatures pay $10,000 per year). Some insurance firms host cocktail receptions. An Independence Blue Cross event included an open bar, cocktail shrimp and other snacks, and a grinning host standing by a table full of corporate booklets.

Insurance companies recommend seminar topics through their own related but independent nonprofit, the Industry Education Council to NCOIL, which spent $160,000 in 2011 supporting NCOIL events and research and sponsoring “scholarships for continuing education.” According to tax filings, most of that money was given to yet another related nonprofit, the Insurance Legislators Foundation, which also supports NCOIL activities and provided $50,000 to help pay travel costs for lawmakers to attend the group’s meetings in 2011. More recently, the foundation paid the way for 10 of the 63 lawmakers who attended the July meeting.

Many states would not allow companies to pay directly for a legislator’s travel, said Peggy Kerns, director of the Center for Ethics in Government at the National Conference of State Legislatures. Ten states ban corporate gifts, she said, and about a third of all states impose a monetary limit. But Kerns said that in many states, funneling the money through a foundation would avoid a ban on companies paying for lawmakers’ travel. For instance, NCOIL is explicitly exempted from Indiana’s lobbyist law.

“I’m not going to say that legislators should not attend or should not use the scholarships, but if I were a legislator I would want to make sure that there’s no appearance of impropriety,” Kerns said. “Does it look as if legislators are cozying up to the insurance industry, and if it does, how does that look to their constituents?”

J. Robert Hunter, a former head of the Federal Insurance Administration who runs the insurance program at the Consumer Federation of America, has followed NCOIL for decades and said industry groups push for NCOIL resolutions so they can then use them as lobbying tools in state capitols. “You can count on NCOIL taking positions that are pretty close to what the industry says,” he said.

Susan Nolan, the NCOIL director, disputes that the organization has an industry bias. “Our goal is always to make sure that our legislators hear every perspective on an issue,” she said, “and I believe they do.” Nolan and her staff invite consumer advocates to speak on panels, she said, and offer to pay their travel costs if need be. However, of the 276 attendees at the July meeting, only three represented consumer groups.

George Keiser, a state representative from North Dakota and an NCOIL member, said agents and brokers came to him with concerns about the navigator program early in 2012. He brought the idea to NCOIL soon after and began work on a resolution, which NCOIL’s health committee and executive committee adopted as final this past March. The insurance industry is the top donor to Keiser’s campaigns, according to the National Institute on Money in State Politics, giving $5,050 since 1998, about 28 percent of all his campaign receipts.

Keiser’s resolution calls on states to require their own training and licensing regimes for navigators and to prohibit navigators from recommending specific insurance plans. It also calls for background checks and several other measures that match those ultimately passed in most states. Keiser’s resolution also includes most of the recommendations issued last December by the National Association of Health Underwriters and several passages match the recommendations nearly verbatim.

Keiser said the federal rules are insufficient and that states ought to have oversight of navigators. He acknowledged that agent and broker groups helped write his resolution, but brushed aside concerns of a conflict of interest. “Clearly they have a self-interest,” he said, “but I honestly believe that their primary interest was in protecting the consumer.”

Lynn Quincy, a senior health policy analyst with Consumers Union who was invited to NCOIL’s March meeting to testify before the health committee on behalf of various consumer representatives, said Keiser’s and the agent and broker groups’ magnanimous claims are disingenuous.

“It was trying to get passed under the guise of being good for consumers but it was not supported by a single consumer group,” Quincy said. She read a statement at the hearing laying out her concerns and submitted a letter warning that some measures, if adopted by states, could conflict with federal law. But she said the NCOIL committee seemed to ignore her comments. “My impression was this was a foregone conclusion and this public meeting was just a formality.”

Parade of states

At least sixteen states have passed navigator laws since 2012, with most coming this year, including Ohio, Florida, Missouri, Texas, Indiana and Wisconsin. (Illinois’ Gov. Pat Quinn has yet to sign that state’s law. Louisiana, not included in this list, passed a life insurance bill including a clause directing the state to issue rules to regulate navigators, but did not specify what they should be.) Lawmakers introduced similar bills in Michigan, North Carolina and Pennsylvania that have not passed.

Most of the laws closely match NCOIL’s resolution — and the recommendations forwarded by agent and broker groups. In Georgia, for example, the law calls for navigators to undergo background checks and prohibits them from giving advice “concerning the benefits, terms, and features of a particular health benefit plan,” a clause that consumer groups say goes far beyond imposing reasonable regulation.

State Rep. Smith, the bill’s sponsor, said he was concerned primarily for consumers. “We want to make sure that the person who gives them the information is trained and qualified to do so,” he said. The idea for the bill came from a colleague, Rep. John Meadows, who also works as an insurance agent and is a member of the Northwest Georgia Association of Health Underwriters, which helped write the bill, Smith said.

Even after passage of the Georgia law, insurance agents continued to lobby on the issue, spending more than $1,500 over two days in June on meals and a round of golf for insurance department staff as they worked on the rules implementing the law, according to state filings.

In Missouri, where the bill also originated with agents and brokers and was largely based on NCOIL’s resolution, a rule issued July 24 by the insurance department allayed some concerns. While the law called on the department to require training and certification, the new rule says that the federally-mandated training will be sufficient.

Lawmakers in a few states have shown that it’s possible to regulate navigators while avoiding many of the concerns raised by consumer groups. In Virginia, for example, the law allows the state to receive and investigate complaints against navigators and prohibits navigators from advising which plan is better for a client. But it doesn’t prohibit them from advising on the details of plans, nor does it impose additional state-mandated licensure.

In Nebraska, state Sen. Burke Harr introduced a bill that he said was based on NCOIL’s resolution. But as the legislature began debate, consumer groups including AARP began pushing for changes. After facing more than a dozen amendments from opponents, Harr agreed to amend the bill, and the final language establishes state regulatory authority but imposes few restrictions beyond those in federal rules.

While much will depend on how state insurance departments implement the rules, some of the more restrictive laws could face lawsuits arguing they conflict with federal law. Timothy Jost, a health policy expert at Washington and Lee University School of Law, said that while fraud is a legitimate concern, he thinks the energy put into the laws is misplaced.

“It just seems to me that if people want to commit fraud they don’t have to pretend to be a navigator and they certainly don’t have to become a navigator,” he said. Jost is baffled by the attention given to the issue, which he said agents and brokers have continued to push in health policy circles. “It’s like a zombie,” he said. “You just keep killing it and it keeps coming back again.”

Erin Quinn contributed to this story