August will be a crucial month for insurance agents seeking to preserve their relatively large commissions on the sale of small health insurance policies.
Officials of several agents’ groups have confirmed that they are negotiating with state insurance commissioners, who are playing a key role in implementing the new healthcare law.
Officials of the trade groups met with seven insurance commissioners who were attending meetings of the NAIC’s Health Insurance and Managed Care Committee and subgroups in Washington, D.C., according to several industry officials.
They are crafting provisions of the Patient Protection and Affordable Care Act that by law become effective Sept. 23.
The NAIC is drafting them, and will play key roles in implementing them, but they still must be approved by the Department of Health and Human Services, according to the law.
The agents’ groups are seeking some form of exemption for their commissions from a provision of the healthcare reform law, the Patient Protection and Affordable Care Act.
The provision, Sec. 2718 of the bill mandates that 85 percent of healthcare premiums be allocated to actual care, and that administrative costs be limited to 15 percent of premiums.
In their meetings with the seven commissioners, representatives of the agents’ groups have proposed a compromise designed “to find a pathway that ensures “our members can continue to make a living,” according to one lobbyist involved with the talks.
“Crunch time will be August,” confirmed one lobbyist. And, the lobbyist said, “talks are at a delicate stage.”
They are pointing to the request already submitted to HHS for a waiver of the MLR mandate by Maine Insurance Superintendent Mila Kofman.
In her petition to HHS, Kofman argued that at least one of the state’s two insurance companies would likely leave the individual market if the law is implemented. “[A]bsent a waiver, I believe that the federal MLR standard may disrupt our individual health insurance market,” Kofman wrote in a letter to HHS.
Citing the Kofman request, another lobbyist for an agents’ group said, “It is telling that even before the regulation is implemented, that a state is seeking a waiver.”
He added, that, “We are seeking a way of dealing with the commissioners in such a way as to allow them to adhere to the law without throwing the baby out with the bath water.”
Talks have been underway for several months, and the agents’ industry joined together in a June letter to the NAIC that warned of the fragile nature of the small group and individual market and the key role agents play in serving the small and individual markets, which in some cases provide commissions of up to 20 percent of premiums.