MLR: Agent allies may take indirect approach

July 13, 2011 By Arthur D. Postal

Producers have argued that the customers are the ones who really pay the commissions, and that the insurers simply collect the commissions as a courtesy to the customers. The producers have asked regulators to reflect that view by keep producer commission payments out of the MLR formula.

Some consumer representatives -- individuals that the NAIC has picked to represent consumers in NAIC proceedings -- say there is evidence that health insurance commission levels and consumer access to health insurance agents and brokers may be more stable than producers have suggested.

Janet Trautwein, chief executive officer of the National Association of Health Underwriters (NAHU), Arlington, Va., said NAHU never expected the committee to vote on the issue so soon.

NAHU has provided the NAIC and HHS with a 120-page report showing the devastating impact the MLR provision is having on health insurance producers, especially those serving the individual and very-small group market, Trautwein said.

The companies serving these markets have been cutting services, closing up, or laying off employees as a result of the federal MLR provision, Trautwein said.

Negotiations with HHS are ongoing, and “HHS has modified or delayed many other provisions of the health care law that have been criticized by interested parties,” Trautwein said.

Ethan Rome, executive director of Health Care for America Now, Washington, a group that supports PPACA, said the NAIC executive committee decision not to back H.R. 1206 is a “victory for consumers and businesses.”

“I think it does send a clear message to Congress that this is not an issue that should be taken up, because it is simply too divisive,” Rome said.

H.R. 1206 asks members of Congress to pick winners and losers, and it pits brokers against consumers and all small businesses, Rome said.

Implementing the bill as law would “take $1.3 billion in rebates from consumers and give it to the insurance companies without any guarantees that it will solve any of the problems that brokers have raised,” Rome said.

Trautwein said any rebates consumers get as a result of the MLR provision “will likely be quite modest.”