Health Reform Update from the National Business Coalition on Health
The National Association of Insurance Commissioners (NAIC) is
considering whether to endorse legislation that would remove broker and agent
commissions from the medical loss ratio, a calculation that could give
consumers valuable insights about the proportion of their premiums spent on
health care costs compared with administrative expenses and salaries. Removal
would have far-reaching implications for the reliability of the MLR as a measure
of a health plan's value, for the broader goal of improving quality and
controlling costs, and for the NAIC itself.
Last year, the NAIC recommended
that HHS adhere to the law's requirement that brokers' and agents' fees be
included in the MLR. That position resulted from a thorough process that
included input from interested groups representing consumers, insurers, brokers
and agents, and others. The recommendation represented an equitable balancing
of numerous perspectives, and HHS adopted it virtually unaltered.
The brokers and agents responded
by waging an intensive lobbying campaign urging the NAIC to endorse a bill by
Rep. Mike Rogers, R-Mich., that would remove these payments from the MLR
calculation. Some of the NAIC consumer representatives strongly opposed such a
move, arguing that the economic consequences for consumers and the government
had not been adequately examined. The NAIC elected to study the issue further
before making a final decision, which could come this month.
Numerous organizations
representing consumers and patients believe that, for the MLR to be a
meaningful measure of consumer value, broker and agent fees must be included in
the calculation as an administrative expense. Excluding these fees would
essentially hide a significant driver of premium costs and undermine an
important opportunity to contain unnecessary administrative expenses. It would
also dilute the law's efforts to make health insurance more transparent and
comprehensible, and to empower consumers to make informed decisions when
choosing a health plan. (Source: NAIC consumer advisory group, May 10, 2011)