Agents Plan To Take MLR Fight To Next Congress

NU Online News Service, Nov. 24, 11:57 a.m. EST

Insurance agents plan to take their battle to retain their current health care insurance commissions to Congress.

In the latest move connected to how agent commissions will be accounted for in the new medical loss ratio (MLR) guidelines, the National Association of Health Underwriters said it will be seeking legislation in the next Republican-controlled House that would exempt agent commissions from the MLR.

The MLR guidelines, proposed by the National Association of Insurance Commissioners (NAIC) and adopted by the Department of Health and Human Services (HHS), deal with how the new health care law provision that individual health insurance policies must spend 80 percent of premiums on medical care and quality improvement activities, with administrative costs limited to a maximum of 20 percent. The administrative cost cap for group health plans is 15 percent.

Agent groups had argued to exclude agent commissions from the 20 percent administrative cost restriction, but the NAIC and HHS declined to grant a formal pass-through for commissions because they were unsure of their legal authority to do so.

Now, NAHU has joined the Council of Insurance Agents and Brokers, the Independent Insurance Agents and Brokers of America and the National Association of Insurance and Financial Advisers in saying that they plan to seek a legislative solution if HHS does not grant a waiver for agent commissions.

"NAHU is concerned that this rule will lead to severe market disruption in the individual and small-group health insurance markets," NAHU CEO Janet Trautwein said in a statement.

"While NAHU agrees with the goal of providing consumers with greater value for health care dollars spent, medical loss ratio requirements significantly and negatively impact coverage choice and affordability."

State insurance regulators and HHS all repeatedly acknowledged the harm the MLR calculation could do to agents and brokers, Trautwein said.

IIABA said it will also push for congressional intervention if HHS does not act. "The IIABA is very concerned that the MLR provision of the new health care reform law will have a devastating effect on the private marketplace and that consumers will be negatively impacted," said Charles Symington, IIABA senior vice president for government affairs.

"If, after hearing from various interested parties, HHS does not fix this language before the rule is final, we hope that Congress will step in and revise the MLR formula through the legislative process," he said.

Terry Headley, president of NAIFA, said the regulations treat agent commissions as non-claims expenses, and decline special treatment for such expenses. "NAIFA will provide comments on the regulations and also will seek a bipartisan legislative approach in the 112th Congress to ensure professional, licensed and regulated agents can be fairly compensated for assisting consumers," he said.

Officials at CIAB said the entire industry will work to get the new Republican-led House to pass legislation containing a number of fixes to the healthcare reform legislation.

The problem will be in the Senate, according to a CIAB official, where there is strong support for limiting commissions as a means of helping control health care costs.

A CIAB official particularly mentioned Sen. John Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, an advocate for a strong MLR, and said consumer groups support controls on agent commissions as part of the effort to control health care costs.

"We can get anything we want through the House," said one industry lobbyist. "The problem will be the Senate."

The MLR provisions are set to take effect Jan. 1, 2011.