According to a report from the Joint Economic Committee, the federal government is spending more on insurance brokers.
As part of a brief entitled “Right Plans or Wrong Incentives? How Broker Payments May Raise Federal Spending,” the JEC wrote that while brokers serve a useful role, the current incentive structures may be undermining their effectiveness and contributing to higher system costs.
“Broker spending is sharply rising in Medicare Advantage and the Affordable Care Act, and we need to ask whether that growth is delivering real value, or just higher costs to the federal government,” U.S. Rep. David Schweikert (R-AZ), chair of the committee wrote. “Brokers can help people navigate a complex system, but current incentives may also be driving inflated costs and improper enrollments. This should concern anyone focused on providing the best health insurance options for the American people while protecting taxpayer dollars.”
The committee’s report also found that broker spending is large and rising. Across Medicare Advantage, Part D, and Affordable Care Act-regulated individual, small group and large group markets, annual broker spending has risen to more than $25 billion, with Medicare Advantage accounting for the largest portion of that spending. Additionally, the report found that agents and brokers are playing a growing role in federally subsidized health insurance markets. In the ACA Marketplace, broker spending rose sharply after 2020, coinciding in rapid enrollment growth and expanded premium subsidies. Medicare Advantage insurers spent an average of $234 per member, per year on brokers in 2023, the report found.
Lastly, the report said, higher broker spending is associated with higher overpayments from coding intensity, especially among the largest insurers.