The National Association of Insurance Commissioners (NAIC) has adopted a resolution urging Congress to amend the Medical Loss Ratio (MLR) provisions of the Patient Protection and Affordable Care Act (PPACA) to ensure consumer access to agents and brokers.
Under the MLR provision, insurance providers must spend 80 to 85 cents of every premium dollar on health care services and only 15 to 25 cents on administrative costs, depending on whether they’re insuring individuals, small groups or large groups. Currently agent commissions are included in administrative costs.
The NAIC resolution asks the Department of Health and Human Services (HHS) to mitigate the adverse effects of the MLR rule with respect to agent and broker compensation by (1) approving state MLR adjustment requests, (2) suspending implementation and enforcement of MLR requirements relative to agent and broker compensation, and/or (3) classifying a portion of agent and broker compensation as a health care quality expense.
Not all state commissioners were in favor of the resolution, 26 state insurance commissioners voted for of it, while 20 voted against it.
Texas Insurance Commissioner Eleanor Kitzman along four other commissioners abstained from voting.
In a statement released by the Texas Department of Insurance, Kitzman said she appreciates “the NAIC’s work and leadership on this important issue. While I support the goal of the NAIC resolution and believe consumers need the qualified assistance of health insurance agents and brokers now more than ever, I do not believe this resolution is the best way to ensure that agents and brokers are able to continue to provide valuable services to consumers.
“In a market with more than 30 small- and medium-sized health insurance carriers, agents are critical to promoting a competitive market and ensuring that consumers obtain the coverage that best suits their needs. It is unfortunate that consumers are being put in this no-win situation and are being forced to navigate an overly and unnecessarily complex system without the benefit of expert, trusted advisors.
“Texas has requested a waiver from HHS to phase in PPACA’s MLR requirements to prevent disruption of the Texas health insurance market, including reduced consumer access to important services from agents and brokers. We will continue to pursue that waiver as the best short-term remedy to maintain stability in the second largest health insurance market in the country and to work with all stakeholders to meet the needs of consumers during this tumultuous time.”
NAIC President and Iowa Insurance Commissioner Susan Voss, acknowledged that not all states agree on the MLR issue.
“The impact of the MLR provision on agents and brokers’ ability to serve consumers has been the subject of extensive debate among regulators and there is clearly not unanimous agreement on this issue,” Voss said in a statement released by the NAIC. “However, the resolution follows up on concerns consistently raised by the NAIC since passage of the Affordable Care Act in comments to HHS and letters to Congress. In addition to calling upon Congress to amend the MLR portions of the Affordable Care Act, the resolution specifically asks HHS to take action through its rule-making process to help preserve consumer access to insurance agents and brokers.”
Agents have come out strongly in favor of modifying the MLR requirement, saying that reduced compensation to agents and brokers will hurt consumers.
“The impact of the medical loss ratio has been dramatic on the agents and brokers in this country and it was dramatic immediately,” Beth Ashmore, an independent insurance agency owner from Lubbock, Texas, and a health care insurance and employee benefits specialist, told state insurance commissioners at an NAIC meeting in Austin last spring.
The Independent Insurance Agents & Brokers of America (IIABA or Big “I”) praised the NAIC’s recent action on the MLR.
“The Big ‘I’ applauds the NAIC for its recognition of the detrimental impact the MLR calculation has had on independent insurance agency small business owners, consumers, and their agents and brokers,” said Robert Rusbuldt, Big “I” president and CEO. “If the MLR formula is not corrected soon, consumers will suffer the prospect of losing the professional, licensed guidance of insurance agents during this time of great change in the health insurance market.”
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