It hasn’t been easy for health agents and brokersmoving forward after new federal medical loss ratio regulationswere passed last November. Shortly after, producers saw theircommissions slashed as carriers adjusted overhead to make room forhigher claims payouts. Up on the Hill, amid a full-repeal outcryfrom Republicans, a handful of lawmakers have underscored theagent’s plight as an example of reform’s dangerous dominoeffect.

The National Association of HealthUnderwriters has been a persistent liaison in the mix, lobbyingthe need for immediate regulation change in order to preserve jobsand 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’sannual Capitol Conference in Washington. The association meetsevery year to converse with legislative leaders on issues andupdate agents on market trends.

The MLR’s effect on producer income has been a quiet, butcontentious issue – a spin-off debate for lawmakers to highlightthe pervasive nature of reform. The impetus for restricted,uniform MLR rules was to push transparency, trim administrativewaste and ensure consumers are getting value for their premiumdollars. But, Waltman argues, reform mandates have adverselyfractured small group markets, burdening employers with highercoverage costs and new compliance headaches.

In fact, she emphasizes, “The new law is making [smallemployers] nervous about hiring and even offering benefits at all.”And brokers and agents in turn are “diversifying, ceasing to offercertain types of coverage, ceasing to represent certain carriers,leaving certain markets, and in some cases as a last resortreducing client services and cutting their staff. All this means isthat there will be less agents and trained service professionals to help Americanhealth care consumers.”

The Department of Health and Human Services estimates theAffordable Care Act will save small businesses a collective $6billion thanks to tax credits. But, as Waltman points out, MLRregulation stands to leave consumers under served when fewerinsurers are willing to write health insurance in the individualand small-group markets, or both. “Major carriers have alreadyreduced product offerings and/or left the small group market incertain states, and we expect more to follow if changes aren’t madesoon. If carriers are forced to pull out of state insurance marketsaltogether because of the MLR rules, this will hinder competitionand raise prices everywhere, including in the newly created statehealth 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 usedto implement MLR regulations. Price’s amendment to the spendingbill 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 brokercommissions are expressively exempt from medical loss ratiocalculation. “I believe we will have bipartisan support for thismeasure,” Waltman says. [See related: NAIC stalls MLR commission vote]

“Representative Rob Andrews (D-N.J.), who was one of the sixcoauthors of the original House Democratic health reform bill,publicly endorsed the concept at the [Capitol Conference], and wehave had lots of other interest from members of Congress on bothsides of the aisle and in both chambers.”

NAHU has reiterated agent and broker commissions are not part ofhealth insurers’ administrative expenses, but are “passed-throughfees folded into insurance premiums as a consumer convenience andas a means of complying with state anti-rebating laws; they neverhave been any part of the insurer’s bottom line,” as CEO JanetTrautwein explains in a letter to HHS Secretary KathleenSebelius.

Through the flurry of rhetoric, Waltman insists this is acrucial time for agents to affirm their value. “All agents I talkto are taking great pride in their ability to help both employersand individual clients make their way through all of the healthreform-related confusion, find them the best policy to suit theirindividual needs and then provide great service to thosepolicyholders over the lifetime of the contract.”

More medical loss ratio coverage from BenefitsPro:

• PPACA: NAIC panel backs MLR measure
• NAICweighs broker bill
• NAIFA's agent survey exposes MLR impact
• Group calls broker bill a 'death blow' to consumers
• NAIC ices agent comp MLR exclusion effort