H.R. 1206 — a bill that would get health insurance agent and broker compensation out of minimum medical loss ratio (MLR) calculations — could cost the federal government about $1.1 billion from 2013 to 2022, according to budget analysts at the Congressional Budget Office (CBO).
The bill could increase federal spending by $447 million over that period, and it could cut federal revenue by $675 million, the analysts estimate in an H.R. 1206 budget impact report.
Holly Harvey, a deputy assistant director at the CBO, approved the estimate. The team that developed the estimate included members of the staff of the congressional Joint Committee on Taxation as well as members of the CBO staff.
The PPACA MLR provisions
The minimum MLR provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) now require health insurers to spend at least 85 percent of large group revenue and 80 percent of individual and small group revenue on health care or quality improvement efforts, or to make up the difference by sending customers rebates.
Health insurance agents and brokers say health insurers are responding to the limits on sales and administrative costs by slashing commission rates and cutting or eliminating other types of compensation.
Producer groups have argued that customers are the ones who really pay commissions, and that insurers simply collect the commission payments as a courtesy to the customers. The groups have argued that insurers should leave producer compensation amounts out of PPACA MLR calculations.
Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga., introduced H.R. 1206 in March in an effort to get health producer comp out of the PPACA MLR formula.
Members of the House Energy & Commerce Committee approved the bill in September.
The elections held Tuesday left the House in the control of the Republicans but will increase Democrats’ hold on the Senate. Analysts at Washington Analysis suggested earlier in the year that getting H.R. 1206 through the Senate could be difficult.
The list of producer groups fighting for passage of H.R. 1206 includes the Independent Insurance Agents and Brokers of America (IIABA), the National Association of Insurance and Financial Advisors (NAIFA) and the National Association of Health Underwriters (NAHU).
The CBO report