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Agent-friendly MLR bill could be revived in expanded form

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Rep. Marsha Blackburn, R-Tenn., vice chair of the House Energy and Commerce Committee today told the National Association of Health Underwriters (NAHU) to keep its eye on her committee as well as on Ways and Means for action this year on health reform policy change initiatives and other work on Republican priorities, including the possible reinvigoration of some old business with agent-promoted legislation. 

Blackburn specifically mentioned three pieces of legislation she supports, beginning with the currently dormant H.R. 1206, the so-called MLR (medical loss ratio) bill that would change the provision in the Patient Protection and Affordable Care Act (PPACA) rules in order to have insurance agent commissions stay in the numerator, with health care costs.

The bill, which sundowned with the last Congressional session after it passed out of the Energy and Commerce Committee, would have exempted commissions paid to insurance agents finding health policies in the individual and small group markets from the medical loss ratio calculation mandated under PPACA.

The MLR provision limits administrative costs in health insurance premiums to 15 percent for large groups and 20 percent for small groups. As a result, agents say their commissions have been cut by up to 50 percent on health insurance products.

The old H.R.1206 was sponsored by Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga., and had scores of co-sponsors.

However, NAHU is looking at helping legislators craft a new bill serving agents on the MLR issue, and expanding it to some of their other concerns with PPACA implementation as well.

“We are potentially looking at a broader broker bill dealing with how agents interact with the exchanges,” said Brooke Bell, director of government affairs for NAHU to the National Underwriter here. For example, this bill could include concern with the navigators and agents role in the state exchanges, which will be run in partnership with the federal government or by the states themselves.

However, action on the MLR initiative is now in a holding pattern, awaiting further details on the role of agents in the exchanges and other concerns of the membership.

The MLR regulations have made it “nearly impossible” for agents to invest in their businesses, Blackburn, a leading conservative voice on cutting spending and balancing the budget, said to the NAHU legislative session before agent and broker members left to lobby Congress today.

To general agent applause, Blackburn championed to other bills of her colleagues. For example, Rep. Dr. Charles Boustany Jr., R-La., has bill H.R. 763 to repeal the annual fee on health insurance providers enacted by PPACA, and said the efforts to repeal this tax has received bipartisan support. Blackburn is a sponsor of this bill, entered Feb. 14, and a day later referred to the Committees on Energy and Commerce, and Ways and Means.

She also received healthy applause for mentioning the Liberty Act – Letting Insurance Benefit Everyone Regardless of Their Youth – sponsored by Rep. Dr. Phil Gingrey, R-Ga. The bill, H.R. 544, introduced Feb. 6, would allow the states, not the federal government, to determine their age-rating bands to prevent spiking costs for young, healthy people that would propel them leave the health insurance market in droves, as feared. 

The current age ratings will cause costs for the young to skyrocket, which could encourage them to pay the tax and go uninsured and destabilize the individual market, Blackburn said, in broaching the Liberty Act bill as a fix for that.

Under PPACA, insurance providers must restrict the difference in premiums due to age to a 3-to-1 ratio. In reality, the cost disparity between a 26-year-old and 64-year-old is far greater, approaching or exceeding a 5-to-1 ratio, Gingrey states in a press release. To make up the difference, the costs will be passed on to young people in the form of higher premiums, with some increases as high as 40 percent, he stated.

The Liberty Act allows states to determine the age discount in their insurance market. Should a state fail to act, the legislation establishes a rating which better reflects the correlation between age and health care costs.

The bills’ chances in the Democratic-controlled Senate are uncertain. Energy and Commerce stayed mum on the future incarnation of H.R. 1206 today.


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