U.S. health insurers seemed to be somewhat more successful at cutting group health administrative costs in 2012 than at cutting broker compensation.

Insurers cut total broker spending just 3.5 percent between 2011 and 2012, to $8.5 billion in 2012. 

Over that same period, insurers cut annual group health administrative expenses 4.8 percent, to $16.7 billion in 2012. The biggest drop came in small-group administration expenses, which fill about 9 percent.

Michael McCue, a health administration professor at Virginia Commonwealth University, and Mark Hall, a law professor at Wake Forest University, have published data supporting that conclusion in a paper distributed by the Commonwealth Fund.

McCue and Hall based the paper on an analysis of the medical loss ratio (MLR) data health insurers filed for 2011 and 2012.

The insurers filed the reports because the Patient Protection and Affordable Care Act (PPACA) now requires health insurers to spend at least 85 percent of large group revenue and 80 percent of individual and small group revenue on health care and quality improvement efforts.

Some have suggested that the PPACA MLR requirements may be forcing health insurers to cut producer commissions and other producer compensation, or that insurers may use the MLR rules as a justification for producer compensation initiatives they would have launched on their own.

Insurers are now preparing to file their third batch of MLR reports.

When McCue and Hall looked at the first two sets of reports, they found total producer comp fell about 7 percent in the individual market, to $1.3 billion. But producer comp in the small-group market and large-group market fell less than 3 percent.

Insurers that fail to meet the PPACA MLR goals are supposed to compensate the plan members using rebates or other means.

Insurers paid $513 million in rebates in 2012, or about half the 2011 total.

The drop shows that insurers were doing a better job of complying with the MLR rules, but spending on quality improvement efforts remained low, the researchers say.

The rebates and reductions in overhead spending may have saved consumers about $3 billion, or about $10 per consumer, the researchers estimate. 

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