It hasn’t been easy for health agents and brokers moving forward after new federal medical loss ratio regulations were passed last November. Shortly after, producers saw their commissions slashed as carriers adjusted overhead to make room for higher claims payouts. Up on the Hill, amid a full-repeal outcry from Republicans, a handful of lawmakers have underscored the agent’s plight as an example of reform’s dangerous domino effect.
The National Association of Health Underwriters has been a persistent liaison in the mix, lobbying the need for immediate regulation change in order to preserve jobs and prevent further disruption in health insurance markets. Benefits Selling caught up with NAHU’s Jessica Waltman, senior vice president of government affairs, fresh off the group’s annual Capitol Conference in Washington. The association meets every year to converse with legislative leaders on issues and update agents on market trends.
The MLR’s effect on producer income has been a quiet, but contentious issue – a spin-off debate for lawmakers to highlight the pervasive nature of reform. The impetus for restricted, uniform MLR rules was to push transparency, trim administrative waste and ensure consumers are getting value for their premium dollars. But, Waltman argues, reform mandates have adversely fractured small group markets, burdening employers with higher coverage costs and new compliance headaches.
In fact, she emphasizes, “The new law is making [small employers] nervous about hiring and even offering benefits at all.” And brokers and agents in turn are “diversifying, ceasing to offer certain types of coverage, ceasing to represent certain carriers, leaving certain markets, and in some cases as a last resort reducing client services and cutting their staff. All this means is that there will be less agents and trained service professionals to help American health care consumers.”
The Department of Health and Human Services estimates the Affordable Care Act will save small businesses a collective $6 billion thanks to tax credits. But, as Waltman points out, MLR regulation stands to leave consumers under served when fewer insurers are willing to write health insurance in the individual and small-group markets, or both. “Major carriers have already reduced product offerings and/or left the small group market in certain states, and we expect more to follow if changes aren’t made soon. If carriers are forced to pull out of state insurance markets altogether because of the MLR rules, this will hinder competition and raise prices everywhere, including in the newly created state health insurance exchanges.”
Members of Congress have voiced support to change the law. During a House review in February of a federal spending measure, Republican Congressman Tom Price of Georgia tried to deflect the fallout by cutting off funds that are used to implement MLR regulations. Price’s amendment to the spending bill passed by a 241-185 margin.
At time of print, Waltman said Congressman Mike Rogers, R-Mich., has “committed to introducing legislation to correct this problem” – specifically to alter the law’s language so that agent and broker commissions are expressively exempt from medical loss ratio calculation. “I believe we will have bipartisan support for this measure,” Waltman says. [See related: NAIC stalls MLR commission vote]
“Representative Rob Andrews (D-N.J.), who was one of the six coauthors of the original House Democratic health reform bill, publicly endorsed the concept at the [Capitol Conference], and we have had lots of other interest from members of Congress on both sides of the aisle and in both chambers.”
NAHU has reiterated agent and broker commissions are not part of health insurers’ administrative expenses, but are “passed-through fees folded into insurance premiums as a consumer convenience and as a means of complying with state anti-rebating laws; they never have been any part of the insurer’s bottom line,” as CEO Janet Trautwein explains in a letter to HHS Secretary Kathleen Sebelius.
Through the flurry of rhetoric, Waltman insists this is a crucial time for agents to affirm their value. “All agents I talk to are taking great pride in their ability to help both employers and individual clients make their way through all of the health reform-related confusion, find them the best policy to suit their individual needs and then provide great service to those policyholders over the lifetime of the contract.”
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