Passage of landmark health care reform legislation last March is forcing participants in the insurance industry, especially agents, to mobilize in efforts to secure changes to the legislation that ensure they have a role in the industry going forward.

Efforts will focus on three battles, according to property and casualty insurance underwriter and agent/broker trade groups, reacting to the law, known as the Patient Protection and Affordable Care Act.

o Repealing a provision that requires any business to file a separate 1099 form with the Internal Revenue Service for expenditures paid to a single vendor totaling $600 or more during any year. The provision goes into effect in 2012.

o Seeking a legislative or regulatory exemption for agent commissions from a provision that imposes a relatively low 15-to-20 percent limit on administrative costs as a proportion of health care premiums, the so-called "medical loss ratio" provision.

o Protecting the interests of agents and brokers in the health care exchange system that goes into effect in 2014, the key provision of the legislation.

At the same time, officials of the National Association of Health Underwriters said they will be promoting legislation in the new Congress that would provide options to people who joined Medicare Advantage (MA) plans on a trial basis that have been shut down under the new law.

As of Jan. 1, 2011, Medicare beneficiaries in MA plans are limited to disenrolling from those those plans to enroll in traditional Medicare. Before the PPACA was enacted, beneficiaries were allowed to enroll in, change or disenroll from a MA plan during a 90-day period, NAHU officials said, explaining that they are seeking a rollback to the old policy.

"NAHU urges Congress to restore the prior open enrollment period for Medicare beneficiaries and supports H.R. 6502/S. 4040, the Medicare Beneficiary Preservation of Choice Act of 2010," officials said in a statement.

On the MLR issue, NAHU said: "Congress should repeal the MLR requirements or pass legislation to carry out the National Association of Insurance Commissioners strong recommendation that final MLR standards accommodate adequate compensation for professional health insurance advisers, thereby protecting the valuable role that licensed insurance professionals play in serving American health insurance consumers."

"Truly guaranteeing consumers get the most out of their premium dollars requires that they have access to professional benefit specialists, who each and every day help millions of Americans navigate the health care system, advocate on consumers' behalf and empower them to be smart shoppers of health coverage and services."

Joel Wood, senior vice president, government affairs for the Council of Insurance Agents & Brokers, said CIAB's "top mission" in the upcoming Congress is to resolve "the marketplace confusion" and potential erosion of group health insurance policies that has been caused by the MLR provision.

Mr. Wood calls the MLR a "government price control" that went into effect Jan. 1. He said it will have "the perverse effect" of serving as a disincentive for health plans to lower costs.

"In other words, the bigger the health insurance premium, the easier it is to make the numbers work–80 percent MLRs for groups of under 100, 85 percent for larger groups," Mr. Wood said.

"If left unchanged, there is no doubt that many individual and small group insurers will exit the marketplace, displacing millions and hastening the erosion of the employer-provided group marketplace," Mr. Wood said.

"There are many aspects to the PPACA that we believe are unwise, but the MLR provisions are the worst," he said. "Repealing them, or changing them, will be CIAB's top legislative priority," he said. "Even with the Republican surge of 2010, though, this is going to be exceptionally difficult to accomplish," he said.

Meanwhile, he said, CIAB is also doing doing everything it can "to respond to the countless requests for guidance from our members on implementation of the new law," Mr. Wood said.

Officials of the Independent Insurance Agents and Brokers of America agreed. They said they are "working on a wide array of issues associated with the reform law and its implementation. The "most pressing issues" that will be addressed in 2011 are the application of the MLR formula and the 1099 tax form provision, IIABA said.

"These two provisions of PPACA will directly harm small businesses, and will lead to job losses," IIABA said. We will be urging Congress to fix these provisions legislatively," group officials added.

Regarding the 1099 provision, Jimi Grandi, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, noted that "despite widespread opposition to the provision, Congress was unable to pass a repeal, either before the November elections or during the lame duck session that followed them."

"No one will admit being the source of it, and neither side wants to let the other take credit for repealing it," Mr. Grande said. This "should be an easy problem to solve," but because of political gamesmanship, so far Congress can't seem to get the job done," he said.

Leonard Brevik, executive vice president and CEO of the National Association of Professional Insurance Agents, added that the expanded 1099 provision will impose a substantial reporting and paperwork burden on small businesses, "which are the economic engines that power our economy."

In addition, Mr. Brevik said, "state and local governments, as well as nonprofits, will see dramatically increasing costs."

Gearing up for another effort, Charles Symington, IIABA senior vice president of government affairs, said the trade group will work with the Department of Health and Human Services, the NAIC and the National Council of Insurance Legislators and individual states on the creation of health benefit exchanges in anticipation of the 2013/2014 deadlines as laid out in the law.

For its part, the PIA contends the NAIC missed an opportunity to protect agents' interests when it submitted its recommendations on MLR to HHS without an amendment that would have excluded agent and broker compensation from MLR calculations.

"The argument made by the NAIC that it lacked the authority to make such a recommendation rings hollow," PIA officials said.

They added that "a similar rationale was then cited by HHS when it accepted the NAIC's recommendation, "closing the circle that now threatens to shut agents and brokers out."

PIA officials said they will also be working with regulators and state legislatures as many states move to set up health insurance exchanges by 2014.

"PIA is still battling to make sure agents are fairly compensated for their services, but so far we're not sure how much we'll be paid if we sell policies offered through the new exchanges," said Thomas Adderhold, PIA president-elect. "PIA National's regulatory staff is engaged with federal and state officials to ensure that agents don't get squeezed out," Mr. Adderhold added.

At NAHU, officials speaking to broader efforts related to health care reform mandates, said that they working with policymakers and other stakeholders to ensure that implementation of PPACA "is carefully crafted and measured" to mitigate near-term premium increases and does not undermine reasonable private sector health plan innovations aimed at health promotion, patient safety and cost containment.

NAHU also said coverage requirements must be crafted in such a way that employers are not incentivized to drop their insurance offerings, and "dump" their workers into the exchanges.

Special Reports /

Agents' Groups Mobilize To Tackle Health Care Reform Issues

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