A bipartisan bill that would separate broker compensation from the medical loss ratio under the Patient Protection and Affordable Care Act is earning praise from brokers and agents who have argued that the law’s provision is threatening their livelihood.
The Access to Professional Health Insurance Advisors Act — H.R. 2328 — introduced Wednesday by Reps. Mike Rogers, R-Mich., and John Barrow, D-Ga., would clarify that broker compensation is not part of the medical loss ratio calculation as mandated by PPACA.
The PPACA requires insurance companies to spend 80 percent or 85 percent of their premiums on health care costs, leaving only the remaining 15 percent or 20 percent for profit and administrative expenses. To comply with the law, insurers have to cut back on commissions — making it impossible for many brokers to continue the way they do business as they did.
The MLR requirement went into effect Jan. 1, 2011.
The association Independent Insurance Agents & Brokers of America this week praised the bill saying the legislation would “preserve consumer access to agents and brokers.”
“Since going into effect more than two years ago, the MLR regulations have had a detrimental impact on agents and brokers,” Charles Symington, IIABA senior vice president for external and government affairs said in a statement.
The legislation would provide “much needed relief to health agents and brokers across the country” by clarifying that agent compensation is not an insurance company administrative expense.
The impact of the MLR rules on agents and brokers has been damaging since many insurance carriers have significantly cut their agent compensation to comply with the regulations.
"This means jobs are being cut, agents and brokers are beginning to disappear, and small businesses and individuals are having a harder time accessing affordable insurance,” Rogers said this week.
IIABA argued that in turn the MLR calculation has reduced consumer access to agents and brokers, leading to “a detrimental effect on essential services provided” such as guidance in claims processing and tailoring health plans to fit the needs of individuals and businesses.
This isn’t the first time Barrow and Rogers have tried to push this legislation.
Last fall, the House Energy and Commerce Committee passed their similar bill — H.R. 1206 — but it failed to reach a full vote.
Republicans generally supported the bill, saying it would protect the jobs of agents and brokers, while Democrats argued it would weaken an important consumer protection.
Democrats have had some ammo in their argument.
Just last week, the Kaiser Family Foundation said that PPACA’s MLR provision saved consumers in the individual market an estimated $2.1 billion last year — the bulk of it on lower premiums costs.
Barrow said this week that “insurance agents and brokers serve as the voice of health insurance for millions of families and small businesses in rural communities.”
“These folks can help explain to consumers the many changes taking place in the health care world over the next few years, and it’s important that their ability to inform the public isn’t weakened by this new law.”
Poll after poll has found that consumers and employers alike remain confused over the implications of PPACA, with many stating they’re turning to brokers to help guide them through the regulations.
Also read: MLR rule cut premiums, analysis finds