NU Online News Service

WASHINGTON–Trade groups representing agents who sell healthinsurance are seeking congressional support for legislation thatwill exempt agent commissions from the medical loss ratio formularecently approved by the Department of Health and HumanServices.

They are seeking sponsors for the legislation, especially in theHouse, according to several officials familiar with the agents'strategy.

They believe the new Republican majority in the House willsupport them, and note that seven Democrats on the key SenateFinance Committee are vulnerable because they are all facingre-election in 2012, according to the sources.

These sources also say that the legislation is unlikely to be introduced until next year.

At the same time, the National Association of InsuranceCommissioners (NAIC) has formed a task force to advocate for theexemption of agents from the MLR.

According to a statement from the NAIC, the task force will beheaded by Florida Insurance Commissioner Kevin McCarty and willhold its first meeting in early December.

The task force will report to the NAIC Executive Committee.

NAIC's plans to create such a task force were outlined duringthe plenary session at the group's October meeting, where the NAICapproved an MLR formula.

The document was effectively rubber-stamped by the Obamaadministration in the MLR regulation promulgated by the Departmentof Health and Human Services Nov. 22.

The formula provided a transition period for agents.

Both the NAIC and HHS said that they believed they lackedauthority under the health care reform law to exempt agentcommissions from the MLR.

But in its final regulation, HHS asked for comment on what elseit could do to ensure agents remain part of the health care serviceteam.

Under legislation drafted by a loose coalition of insuranceagent trade groups, agent commissions would receive the same exemptstatus in the MLR ratio as federal, state and local taxes willreceive under the existing regulation.

According to industry sources, the legislation was drafted byofficials at the National Association of Health Underwriters. Othermembers of the coalition are the Independent Insurance Agents andBrokers of America, the National Association of Insurance andFinancial Advisors, and the Council of Insurance Agents andBrokers.

Under the MLR, insurance companies must limit administrativecosts to 15 percent of large group plan premiums and 20 percent ofsmall group and individual plan premiums. They must fill out a formin 2012 outlining whether they complied with the MLR, and rebatepremiums to consumers if administrative costs run higher.