Sen. Mary L. Landrieu reminds feds, many health insurance agents are small business owners, too, and a new health reform provision threatens to put them out of business at a time when their clients need them most.
Landrieu, chair of the Senate Committee on Small Business and Entrepreneurship, sent a letter to Health and Human Services Secretary Kathleen Sebelius expressing concern over the medical loss ratio provision of the Affordable Care Act.
The MLR provisions require health insurance companies to spend 80 to 85 percent of premium dollars on patient care and quality improvement, leaving the remainder for marketing, administrative costs, profits, and other expenses. The goal of the provision was to ensure that insurance companies were providing the highest standard of care, but agents have taken a hit in the form of lost commissions.
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In the letter, Landrieu warns that the MLR requirements harms insurance agents and the small businesses that rely on them. Because HHS regulations for medical loss ratio calculations include agent compensation among administrative costs, many agents are seeing their compensations reduced significantly.
Landrieu writes, "The regulations that HHS has issued are negatively impacting the livelihoods of insurance agents, who are small business owners that provide valuable guidance and support to insurance consumers at the point of sale and throughout the life of the policy." She adds that the MLR regulations are "threatening to put many out of business at a time when the need for agent services in the years to come is likely to be great."
Landrieu also comments on the impact of the MLR regulations, such as a decrease in ability to navigate the health insurance marketplace by individuals and small businesses. Landrieu advises Sebelius not to include agent compensation in the MLR calculation, and further urges HHS to hold off making a final decision on agent compensation until the department determines its authority to act.
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