A House subcommittee late Tuesday passed legislation that would exempt commissions paid to insurance agents from the medical-loss ratio calculation mandated under the healthcare reform law.

The bill is H.R. 1206. It is sponsored by Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga. It was introduced last March.

The bill was reported out of the Health Subcommittee of the House Energy & Commerce Committee by voice vote.

An E&C Committee spokesperson said a full committee markup has not yet been scheduled, but the issue will likely be dealt with before Congress leaves for its October recess.

The bill has 213 House sponsors, including 25 Democrats.

Despite the strong support, “enactment prospects remain well below 50 percent,” according to an investor's note by Beth Mantz-Steindecker of Washington Analysis.

“Even though the bill will likely easily clear the House, Senate Democrats and the Obama Administration oppose changing the policies,” Mantz-Steindecker says.

“The health-insurance industry and the broker community have long sought to re-jigger the MLR formula to allow broker fees to count and thus make it easier for health insurers to reach the federal thresholds,” she adds.

Similar legislation is pending in the Senate.

The Senate bill, S. 2068, the Access to Independent Health Insurance Advisors Act, was introduced in February by Sen. Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship, and Sen. Johnny Isakson, R-Ga. Sens. Lisa Murkowski, R-Alaska, and Ben Nelson, D-Neb., are also cosponsors of that legislation.

The House and Senate bills are somewhat different, but generally seek to “clarify” that producer compensation would not be considered as part of MLR.

The MLR limits administrative costs in health insurance premiums to 15 percent of premiums for large groups and 20 percent for small groups. As a result, agents say their commissions have been cut up to half on health-insurance products.

The Independent Insurance Agents and Brokers of America issued a statement voicing strong support and urging prompt passage.

Ray Young, IIABA senior director of federal government affairs, says, “If the MLR calculation is not quickly corrected to exclude agent compensation, 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.”

He adds, “This damaging regulation has already had tremendously negative effects.”

Special Reports /

House Begins Renewed Effort for Agent MLR Exemption

Related Stories

Recommended For You