Standardized benefit plans that states require insurers to offer have sold very poorly in most states. For a variety of reasons, insurers and agents do not like these plans and so have not actively marketed them. Insurers and agents resist these plans because they see the covered benefits as inferior, or excessive. For a while, some states required only these plans to be guaranteed issue, and so they were expected to attract higher risks. Also, insurers complain about the administrative burden required to adapt their claims processing and computerized systems to reflect the differences in structure and content between their favored plans and these standardized plans.
Insurers use various techniques to encourage agents to avoid high risk subscribers.
Where allowed, insurers pay lower commissions on less desirable business. Also, insurers select and manage their agents in a manner than encourages loyalty and favoritism. The techniques just mentioned, especially lower commissions, have some impact on agents' willingness to sell coverage to higher risk subscribers. However, because most agents are independent of insurers and are paid by commission, they are well positioned and well motivated to promote coverage for both low and high risks, and they resist insurers' efforts to manipulate them. Agents as a whole are very much in favor of small-group market reforms and play a critical role in the success of these reforms.