When the National Association of Insurance Commissioners decided last Sunday to delay action on throwing their support behind a bill that would exclude broker commissions from health reform’s medical loss ratio calculations, the move was met with mixed reviews, but by no means signals an end to the effort, say insiders.
The NAIC’s Professional Health Insurance Advisors Task Force, led by Kansas Insurance Commissioner Sandy Praeger, is postponing a decision on whether or not to endorse the Access to Professional Health Insurance Advisors Act of 2011, sponsored in Congress by Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.), for at least a month to gather more information on the MLR issue.
Florida Insurance Commissioner Kevin McCarty is a vocal proponent of a resolution of broker support, and Joel Wood, senior vice president for government affairs with the Council of Insurance agents and brokers is appreciative of his tenacity. However, Wood says whichever way the NAIC decides to act won’t have much of an impact on CIAB’s own efforts to drum up support for the Rogers/Barrow bill on Capitol Hill.
“The old joke is that the NAIC stands for ‘No Action is Contemplated.’ Let’s hope that moniker won’t be relevant on this issue; that they’ll indeed act in a month,” says Wood. “Everybody talks about the value proposition of brokers, but support for the McCarty resolution is where the rubber hits the road. We don’t need a pat on the head; we need resolve from the commissioners.”
Even so, Gary Herbruck, president of Coordinated Benefit Design in Indiana, looks at the decision as a setback and is also bothered by the stance Department of Health and Human Services Secretary Kathleen Sebelius — herself a former insurance commissioner — continues to take on health care reform. “I’ve been in the group health benefits business for over 30 years and it’s a real slap in the face when career politicians … imply that we are not needed in the benefits process,” says Herbruck. “I’d love to see them explain to our clients the ramifications of Obamacare.”
Pat Carpenter, vice president of business development at Sequent Retirement & Benefits Group in Ohio has the same idea in mind. “Who do the commissioners think will explain to an employee why an ID card wasn’t issued, or a claim wasn’t paid correctly, or a physician is not in the network so the payments aren’t as high as expected? Who will assist in explaining why this office visit was covered in full and this other one was not? Will the no-reason-to-be-motivated bureaucrats answering a phone bank take the time to explain pre-admission requirements? Brokers provide invaluable services to their clients in navigating the maze of insurance requirements that PPACA does nothing to simplify,” he says.
In a Monday press release, advocacy group Consumer Watchdog applauded the NAIC’s decision. “Without the united backing of the state insurance commissioners, the legislation’s special-interest authorship is laid bare and its aim — to protect large percentage commissions on health insurance sales — is easier to detect,” says Judy Dugan, research director for the nonprofit organization. “We applaud the consumer-focused state commissioners who made their doubts known. They put the brakes on an industry pay bonus from the pockets of consumers and taxpayers.”
Andrew Butler, president of Iowa’s Butler Insurance Service, Inc., challenges the negative light in which broker fees are portrayed and welcomes full disclosure. “Personally, I like the idea of having to disclose full fees for the broker. It really clarifies who the broker is working for instead of burying the fees the employer is paying,” he says.
Full disclosure of compensation opens the door to a conversation on the value the broker brings to the employer, Butler adds. “Too often, health insurance is simply treated as a price purchase with no time spent at all on managing the process. And then when the price goes up, everyone is surprised,” he says. “Requiring disclosure of fees will change the dynamics of the conversation at the employer level and require the broker community to justify their pay to their client’s and prospect’s satisfaction.”
At the National Association of Insurance and Financial Advisors, Diane Boyle, vice president for federal government relations, “would have been elated” with an NAIC endorsement of the Rogers/Barrow bill, but says it’s understandable that new commissioners need time to familiarize themselves with the issue. “We are encouraged by the bipartisan commissioner support and remain hopeful that the NAIC will ultimately endorse the bill to preserve consumer service,” she says.
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