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November 23, 2011 at 05:24 AM
The resolution seeking an exemption for agents from the medical loss ratio by the National Association of Insurance Commissioners is unlikely to get the issue to the finish line for insurance agents any time soon.
According to a healthcare industry analyst and the California insurance commissioner, the Department of Health and Human Services has no legal authority to exempt agent commissions from the MLR, as the resolution suggests.
Ira Loss, a healthcare analyst at Washington Analysis, which advises institutional investors and hedge funds, said the change would need Congressional action because the statutory definition of MLR does not allow those commissions to be exempt.
In a statement after the vote, Dave Jones, the California commissioner, saying HHS “lacks the authority to take to take action,” and that it would require Congress to make changes to the federal law to modify the MLR standard as laid out by PPACA. Doing so, Jones noted, would increase the cost of health insurance.
And, in statements in September on the issue, Steve Larsen, director of the Center for Consumer Information and Insurance Oversight said that he believed insurance companies are taking advantage of the MLR to do what they wanted to do anyway: cut producer commissions.
Larsen made these comments in testimony before the House Energy and Commerce Subcommittee on Health.
He said requiring health plans to spend at least 80% of premiums on medical care costs “is a boon to consumers.” He also cited studies from the U.S. Government Accountability Office and others indicating evidence of a reduced growth in insurance premiums.
Industry officials said the key impact, if any, of the resolution would be on congressional action. The E&C panel is considering two related bills, H.R. 1206, which would exclude producer compensation from medical loss ratio calculations and H.R. 2077, which would repeal the MLR entirely.
H.R. 1206, sponsored by Rep. Mike Rogers, R-Mich., and John Barrow, D-Ga., has strong support. But it has been mired for months in the House.
