There’s still hope for change in the Patient Protection and Affordable Care Act for health insurance brokers. Last night new legislation was issued in the Senate that would remove broker compensation from the medical loss ratio calculation that says that 15%-20% of group premiums can go to administrative costs. The bill, S.650, is sponsored by Senators Mary Landrieu (D – La.), Johnny Isakson (R – Ga.), Mark Begich (D – Alaska) and Lisa Murkowski (R – Alaska).
The MLR bill, as it was called during the last legislative session on both the Senate and House sides, will keep the same language as S.2288 that never went to the floor in the Senate during the 112th Congress. The official name of the new bill is Access to Independent Health Insurance Advisors Act of 2013. John Greene, the National Association of Health Underwriters’ vice president of congressional affairs, has worked closely with the senators on the legislation and says the group has high hopes for success for its members — mostly independent brokers who are seeing their compensation cut, on average, in half because of the current MLR regulations. He emphasizes that the brokers are not receiving a paycheck from the carrier and are an important middle man.
“We hope this time we’ll be able to schedule a hearing in the Senate Small Business Committee and one for the House bill through the Energy and Commerce Committee,” Greene says. “And hopefully they’ll both go to the floors.”
Greene says there will also be a new MLR bill in the House, but it is taking more time. The previous version, H.R.1206, was scored poorly by the Congressional Budget Office, according to NAHU. Greene does not have confirmation yet, but this time he’s hoping the Senate and House versions will have the same language which will bode better with House Democrats.
“It’s time to address this issue … that was collateral damage during health reform negotiations,” Greene says. “It was proposed as a measure to address concerns about carrier profit and CEO salaries, but no one ever said anything about broker compensation, this was just a mistake.”
The MLR provision in PPACA says that 85% of large group premiums must go to benefits, leaving 15% for administrative costs and 80% of individual and small group premiums must go to benefits, leaving 20% for administrative costs. With broker compensation being included in the administrative section, Greene says brokers, small business owners themselves, are “bleeding” money.
Janet Trautwein, CEO of NAHU, said in a statement this morning: “Millions of individuals and small businesses depend on licensed agents and brokers to help them navigate the healthcare marketplace and find health plans that suit their needs and budgets. In fact, as the Congressional Budget Office reported, agents and brokers often serve as de facto human resources departments for many small firms—negotiating premiums, processing claims and enrolling employees. Without agents' expert advice, many individuals and businesses will end up spending more for health insurance and receive less care.”
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