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Obamacare costs jobs: Insurance brokers

Nearly five million people visited healthcare.gov Tuesday. That's the main website for the new insurance exchanges. Another five million or so are expected today.

Whether they'll have better luck navigating all the technical glitches is anybody’s guess.

But like it or not, buying health insurance online is the future. And while that may be convenient consumers, it's not such great news for the more than 100,000 insurance agents and brokers who depend on commissions for a living.

As the curtain comes up on the new health exchanges, Virginia-based insurance broker Jonathan Katz reports business has been hopping.

“In the last two days, I’ve received over 40 calls and 50 emails a day,” he says. “Current clients asking ‘what are we going to do with my current plan? What’s my situation?’”

Katz knows that questions and sales aren’t the same thing. And with millions of new customers shopping for insurance under Obamacare, a lot of future sales are going to happen on line without a broker.

Still Katz thinks he’s got an edge.

“Have you tried to get on healthcare.gov?” he asks. “Have you been successful? There you go.”

Brokers are hoping the technical glitches, and the complicated nature of health insurance with the premiums, deductibles and government subsidies will drive consumers straight to that quaint office in the neighborhood.

It’s a nice fantasy, says University of Pennsylvania Professor Tom Baker.

“If insurance companies can get enough business through exchanges, where they aren’t going to have to pay brokerage fees, then they are going to prefer to go through the insurance exchanges,” he says.

Fierce price competition on the exchanges could also eat away at insurance company profits, squeezing brokers commissions.

But Baker thinks some insurance agents will adapt and survive.

“Expedia by the way is an example of a travel agent that reinvented itself for the internet world a broker could be similar,” he says.

Baker says the Jonathan Katz's of the world could develop sophisticated websites that allow consumers to shop just like the exchanges do.

But with more than 100,000 brokers in the mix, he says lots of them are going to be looking for new jobs.

About the author

Dan Gorenstein is the senior reporter for Marketplace’s Health Desk. You can follow him on Twitter @dmgorenstein.

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