NU Online News Service, July 13, 2:51 p.m.EST

WASHINGTON—The National Association of Insurance Commissionershas decided an indirect, behind-the-scenes approach toreducing the strain on health insurance agents through the medicalloss ratio provision will be most effective.

In a surprise announcement, the NAIC exeutive committee says "itchose not to take further action on the Task Force's recommendation, but to continue to work with [theU.S. Department of Health and Human Services] on other possiblealternatives."

Kevin McCarty, Florida insurance commissioner and incoming NAICpresident, says he is not dropping his support for an exemption,but changing his approach.

"Commissioner McCarty has not changed his position, andcontinues to support the bill sponsored by Mike Rogers, R-Mich.,which would remove sales agents' fees from the administrative costsof insurers for calculation of the medical loss ratio," a statementfrom his office says.

The statement adds that the NAIC task force McCarty heads iscontinuing to work with all interested parties and the Departmentof Health and Human Services to "evaluate the possibility of acompromise that would result in a more timely result than pursuinga change in the MLR."

McCarty supports the "underlying purpose of the Rogers' bill,which is to maintain the role of agents, and fair compensation forhealth insurance agents." 

Janet Trautwein, chief executive of the National Association ofHealth Underwriters, says NAHU never expected the NAIC committee tovote on the issue this week.

But, NAHU has provided the NAIC and HHS with a 120-page reportshowing the "devastating impact" the provision is having on healthagents, especially those serving the individual and very-smallgroup market, she adds.

The companies serving these markets have been cutting services,closing up, or laying off employees as a result of the federal MLR,which is much more restrictive than those imposed by states in thepast.

Ethan Rome, executive director of Health Care for America Now!,a consumer-oriented group, calls the decision a "victory forconsumers and businesses."

He says, "I think it does send a clear message to Congress thatthis is not an issue that should be taken up because it is simplytoo divisive."

The Rogers-sponsored legislation asks members of Congress topick winners and losers and pits brokers against consumers and allsmall businesses, and the bill will take $1.3 billion in rebatesfrom consumers and give it to the insurance companies without anyguarantees that it will solve any of the problems that brokers haveraised, Rome says.

At the same time, Trautwein cautions that consumer groups areoverplaying the rebate issue, saying the likely rebates toconsumers if the MLR is not attained by an insurance company willlikely be "quite modest," if anything.

Trautwein says negotiations with HHS over the issue are ongoing.She notes, "HHS has modified or delayed many other provisions ofthe healthcare law that have been criticized by interestedparties." She would not comment further on the talks.