With time running out for action on key regulations, insurance agents are waging an intense battle on several fronts in their efforts to remain relevant in a health market being reshaped through implementation of the Patient Protection and Affordable Healthcare Act. While major reform through creation of health insurance exchanges will not take effect until Jan. 2014, other regulations must be in place by year-end.

Medical Loss Ratios

For insurance agents, a key challenge is the so-called medical loss ratio standard, which requires healthcare plans to spend as much as $0.85 of every premium dollar on healthcare delivery.

Insurance agents, who are being supported by state regulators, want an exemption from these regulations, especially since the small group and individual market they serve currently pay commissions as high as 20 percent.

Health insurers must start compliance with the MLR by Jan. 1 through a “blank” being developed by state regulators and approved by the Department of Health and Human Services. The target date for completing work on the blank is Oct. 1.

Kevin McCarty, Florida insurance commissioner and a member of the NAIC task force crafting the regulations that will be used to implement the new law, is insisting that a continued role be developed for agents.

“Agents serve as a valuable tool in providing healthcare, and we are working to protect the integrity of the relationship,” he said at a recent meeting in Washington.

Mr. McCarty noted, however, that the state commissioners will seek to do that “while maintaining the transparency and integrity of the new law.”

He added that agents provide comprehensive advice when selling and servicing health insurance policies. He said that comparing “buying an airline ticket with purchasing something as complicated as health insurance is not a fair comparison.”

Web Portal

McCarty’s comments also address agents’ concerns over a new web portal unveiled on July 1 by the Department of Health and Human Services. The portal, which enables consumers to compare coverage options and buy health insurance at the lowest possible price, is scheduled to be in place by Oct. 1. It is a precursor of a larger web exchange slated to launch on Jan 1, 2014.

For many health insurance agents, the web portal concept is seen as an occupational threat, much like how online airline and hotel booking services marginalized travel agents. In response, 25 members of the House have asked in a letter to federal health regulators to ensure a role for agents in the web portal.

“We strongly encourage you to include the ability for consumers to contact certified, state-licensed independent health insurance agents and brokers for assistance when comparing coverage options,” the letter said.

“It is important the consumer’s options to contact independent and state-licensed health insurance agents and brokers be included no later than Oct. 1,” the letter said.

John Green, NAHU vice president of congressional affairs, said health insurance agents should certainly play a key role in counseling people about their health insurance options going forward.

“Providing consumers with the option to choose a local agent at the zip code level to assist them in choosing the right coverage for the individual or family makes sense,” he said. You wouldn’t want to call Washington to find out your home or car insurance options; you want someone you can look in the eye and call in the middle of night.”

The CLASS Act

Meanwhile, on July 26, Rep. Charles Boustany (R-La.) introduced H.R. 5853, the Fiscal Responsibility and Retirement Security Act, which if enacted would effectively repeal the Community Living Assistance Services and Supports (CLASS) Act, a new long-term care entitlement program created as part of the larger healthcare reform package but not likely to be implemented until 2013.

The Boustany bill would impose a host of hurdles before the CLASS Act could be implemented, and an immediate shutdown any time it becomes actuarially unsound, with premiums to be refunded and/or to allow beneficiaries to use the funds that remain in their accounts for other purposes.

It would also require the secretary of the Department of Health and Human Services to report to Congress on the final CLASS plan designated by the Department.