The future role of agents in selling small group and individual health insurance policies is clearly in doubt now that the National Association of Insurance Commissioners has decided that it is beyond its authority to exempt these commissioners from the medical loss ratio formula imposed under the healthcare reform law.
At the final plenary session at its fall meeting in Orlando Oct. 21, the commissioners decided to table a resolution that would have encouraged the federal Department of Health and Human Services to allow special considerations for agents in any MLR.
The commissioners cited questions concerning the legality of exempting healthcare agents’ commissions from the MLR before tabling the resolution.
Even the method it used to deal with the issue reflected its sensitivity. The commissioners decided to table the resolution, rather than force commissioners to vote on it.
And, it acted in this manner well aware of the fact that more than 20 commissioners are on the bubble, far more than the usual number, because of term limits, voter anger over the current economy and concern about the Obama administration’s priorities.
Moreover, it did so despite intense lobbying by agents. For example, the bipartisan amendment encouraging HHS to have special consideration for agents in any MLR was cosponsored by 15 state insurance commissioners, including two NAIC officers.
In adopting the MLR, the commissioners also decided against including a transition period for its implementation leading up to the onset of health exchanges in 2014, another agent request.
John Greene, vice president of congressional affairs for the National Association of Health Underwriters, said some sort of pass-through for agents is justified.
He acknowledged that consumer groups pushed for an MLR in the Patient Protection and Affordable Care Act (PPACA) because they believe agents’ commissions run as high as 20 percent.
However, he said, agents’ commissions “can vary very widely,” and that while a “balloon payment” as high as 20 percent may be paid in some cases where new policies are negotiated, most renewals and commissioners are in the six percent range.
He said the industry concern is that non-Blue Cross-Blue Shield companies serving the small and individual market have high administrative costs, and may squeeze agents’ commissions in order to stay within the range.