Despite years of lobbying efforts by broker advocacy organizations, the American Health Care Act makes no mention of removing broker commissions from the Affordable Care Act’s medical loss ratio provision. While not the desired outcome, agent groups believe there is still an opportunity to remove brokers from the MLR provision through regulatory action in the near future.
As written in the ACA, the MLR requires health plans to spend a minimum of 80% of premiums on medical claims (85% in the large group market) and rebate any excessive overhead to enrollees. As a result, most insurance companies have slashed agent commissions, in many cases by 50%, according to the National Association of Insurance & Financial Advisors. NAIFA says 80% of its members surveyed have seen decreased commissions since the MLR went into effect.
Going forward, the fact that brokers’ commissions are not excluded from MLR ratio in the new bill does not mean it is a done issue, agent groups say. Diane Boyle, NAIFA’s senior vice president of government relations, believes that since the American Health Care Act legislation is a reconciliation bill the GOP is “trying not to test the boundaries of what they can put in there.”
NAIFA just submitted comments to the Centers for Medicare and Medicaid Services asking that the agency address the issue in future rulemaking — “removing the agent compensation from both side of the equation, as it does not belong in there at all,” Boyle says.
Boyle refers back to previous GOP remarks that their healthcare reform package would include reconciliation, additional legislation and the regulatory process. Additionally, a previous standalone bill written by then-Rep. Tom Price of Georgia — who is now Secretary of the Department of Health and Human Services — attempted to repeal the MLR, according to Joel Wood, the Council of Insurance Agents & Brokers’ senior vice president of government affairs.
Also see: “The GOP health plan: What employers need to know.”
“The MLR serves as a perverse disincentive for plans to reduce health insurance costs,” explains Wood. “The higher the premium, the easier it is to make the MLR fit. It’s a government price control, and those are always anathema to our membership.”
Finding a path
Referring to Price’s previous position on the MLR, Wood is “upbeat about prospects for ultimate regulatory or legislative relief —but probably not as a part of this” reconciliation package. He adds, “I think there’s widespread support among Republicans in Congress to get rid of the MLR, but I don’t think it fits neatly into a reconciliation bill that has to survive Byrd rule objections in the Senate.”
Taking a slightly different view, John Greene, vice president of congressional affairs at the National Association of Health Underwriters, believes there is a case to make for repealing the entire MLR provision through reconciliation. “But, at worst, we will reintroduce the broker bill which keeps it in the legislative mix, but also sends signal to HHS to use their regulatory authority to provide relief,” he adds.
Excluding commissions is “something the agent/broker community is certainly going to re-engage and see if we can have it brought up as a priority issue,” NAIFA’s Boyle says. “It is a concern. The concerns that we had before don’t go away.”
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