NAHU is very pleased to announce that our CEO Janet Trautwein has been asked to testify at the House Energy and Commerce Committee’s Health Subcommittee hearing on Thursday entitled “PPACA’s Effects on Maintaining Health Coverage and Jobs: A Review of the Health Care Law’s Regulatory Burden.”
The purpose of the hearing is to examine the impact of major rules issued by the Department of Health and Human Services implementing the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010, including the medical loss ratio requirements. Janet will testify on behalf of the association about the severe financial impact the MLR requirements have had on independent agents and brokers. She will also speak in support of H.R. 1206, the bipartisan legislation introduced by congressmen Mike Rogers (R-MI) and John Barrow (D-GA) to remove independent agent and broker remuneration from the MLR calculation entirely.
The House hearing on MLR and other detrimental PPACA rules was announced just following the release of the National Association of Insurance Commissioners' (NAIC) study on the impact the MLR has had on producer commissions and consumer access to health insurance agents and brokers. The report concluded that there was no significant change to agent and broker commissions until January 1, 2011, the date the MLR became effective. At that time, a significant number of health insurance carriers nationwide reduced commissions, particularly first-year commissions in the individual and small group markets. The report also examined 2010 premium data reported by the carriers and attempted to estimate if the MLR rules had been in effect in 2010, what carrier rebates might have been if agent and broker commissions were included in the MLR calculation, partially included or completely excluded. The data showed that the majority of American insurance consumers would receive no rebate at all. Under the most dramatic of scenarios, using the imperfect data, the highest a rebate recipient would potentially receive would be $8.09 a month. That rebate amount would apply to approximately one million individual health insurance market consumers. Those with group coverage who might have been eligible for a rebate would have received between $1.10-$2.10 a month, to be split with their employer based on the employer contribution percentage.
It is NAHU’s view that agents and brokers, through their advice and counsel in designing effective benefit plans, answering consumer questions, helping to process claims and handling countless service issues, provide far more than $1-$8 in both cost savings and value each month to their clients. Furthermore, these will still be needed no matter how health reform moves forward. If insurance departments would have to pick up the slack, they would have to do so at tremendous cost to taxpayers. As Kansas Insurance Commissioner Sandy Praeger told Politico last July, “If we didn’t have the agent community, we’d all have to double or triple the size of our consumer assistance divisions. The agent provides many of the answers to the questions that never come to us because they get resolved.”
The NAIC Health Reform Actuarial Working Group approved their draft report on May 26, and now the NAIC’s Health Insurance and Managed Care “B” Committee will discuss the report at its June 7 meeting. Once they complete their discussion, the NAIC”s Professional Health Insurance Advisor (EX) Task Force will meet and use the report to help guide discussion as to whether or not they should endorse H.R. 1206.