The medical loss ratio provision of the Patient Protection and Affordable Care Act is interfering with insurance brokers ability to make a living and harming consumers who rely on brokers for advice and customer service, according to a new survey by the National Association of Insurance and Financial Advisors.
In fact, 80 percent of respondents say they have experienced lowered commissions since the MLR went into effect. That includes another 52 percent of respondents who have seen compensation drop by 25 percent or more. An additional 12 percent said insurers have told them commissions will be going down in the near future. At the same time, 94 percent of the respondents said their clients' premiums either have increased or are set to increase this year.
"Health insurance agents and brokers don't merely sell insurance; they perform crucial services for their clients," says NAIFA President Robert Miller. "They help companies select the right plans for their employees and help individuals understand their coverage and fix problems with claims. For many small businesses, health insurance brokers act as de facto human resources departments. By and large, brokers don't receive additional compensation for these services."
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The survey finds that 22.4 percent respondents say they have lessened their customer service because of their smaller pay rates, and 29 percent of respondents reporting that they will have to do the same if their commissions stay at this lower level. Another one out of five respondents say they have laid off employees or cut hours for customer-support staff.
"Consumers are the ones who are really hurt by this because brokers simply can't afford to provide the same high level of service after seeing their pay cut by 25 or 50 percent," Miller says. "They're having trouble paying staff, which means there are fewer people to solve clients' problems and answer questions, even as the health care system grows ever more complicated."
Some government officials are starting to recognize how the MLR provision is affecting the industry, and the National Association of Insurance Commissioners passed a resolution that favors allowing consumers to access agents and brokers, which follows a similar resolution passed by the National Conference of Insurance Legislators in July.
"NAIFA is pleased that the NAIC has recognized the adverse effects the MLR is having on the ability of agents to serve consumers," Miller says. "The commissioners are well-respected and have a long history of protecting consumers and ensuring the stability of the insurance market. Their opinion rightfully carries weight among decision-makers in Washington.
"Now it's time for our leaders in Washington to act. The Department of Health and Human Services should place an immediate hold on implementation, and Congress should pass a law to remove commissions from the equation. Rep. Mike Rogers, R-Mich., and John Barrow, D-Ga., have introduced a bipartisan bill in the House of Representatives that would do just that."
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