WASHINGTON BUREAU — The final version of the health bill should give state regulators a great deal of control over how administrative cost and health insurance exchange provisions are implemented, agent and broker groups say.
"As Congress begins the process of combining the House and Senate-passed comprehensive health reform bills into one piece of legislation, our members believe it important that the role of individual states be preserved and strengthened relative to health reform implementation," the groups say in a draft letter reportedly set to go out to all members of Congress Monday.
The groups expected to have representatives sign the letters are the Council of Insurance Agents and Brokers, Washington; the Independent Insurance Agents and Brokers of America, Alexandria, Va.; the National Association of Health Underwriters, Arlington, Va.; and the National Association of Insurance and Financial Advisors, Falls Church, Va.
In the draft, the groups object to a House bill provision that would have the Small Business Administration provide health insurance advisory services for small businesses. The SBA "is already overworked, underfunded and struggling to fulfill key priorities in relation to its current duties and obligations," the groups write in the draft.
The groups also write about health bill provisions that could require health insurers to spend a minimum percentage of premium revenue on paying medical claims.
- The House bill, H.R. 3962, would require carriers to spend at least 85% of premium revenue on paying claims, and it would permit the secretary of Health and Human Services to increase the minimum medical loss ratio.
- The Senate bill, H.R. 3950, would set the minimum medical loss ratio at 85% for large group plans and 80% for individuals and small groups.
Advocates of the provisions say they would cut the percentage of health insurance premiums going to pay administrative costs. Insurance agents are saying the primary effect may be to slash their commissions, especially on sales of health insurance to individuals and small groups. A medical loss ratio provision should stay in the health bill only "if it is absolutely necessary to have a loss ratio requirement" in the final bill, producer groups say..
If a bill similar to H.R. 3962 or H.R. 3950 takes effect, insurers will have all of the same expenses they have today, along with the cost of adapting to the changes made by the health bill, the groups say.
Producer groups are asking Congress to let states lower the minimum medical loss ratio to 75%, at least until 2014, and at least in the individual market. The groups note that 75% is the minimum medical loss ratio now used in many states.
In addition to having a role in defining medical loss ratio minimums, producer groups say states should have a role in determining "if the MLR level is adversely impacting the functionality of each state's specific insurance markets."
H.R. 3950, the Senate health bill, would let each state design and maintain its own exchange, to accommodate the needs of its own people, and the final bill should take that same approach, the producer groups say.
"And in creating these state-based exchanges, it is crucial that Congress preserve state-based flexibility and utilize existing state-based regulatory authority through the nation's governors and insurance commissioners," the groups write. "The federal regulatory functions of any exchanges should be focused on areas needed to facilitate the purchase of insurance by individuals and small employers."
The groups say there are already provisions in both the House and Senate bills that preserve a "continued role of licensed health insurance agents, brokers and consultants, and ensure continued oversight of our industry by the state departments of insurance."
But producer groups say these provisions should be expanded and clarified to ensure that all policies, regardless of the place of purchase, will be available for purchase through an agent or broker. The expanded provisions should cover plans offered through insurance exchanges and any new plans that may be created by the final version of the health bill, such as co-ops or multistate plans, the groups write.
Moreover, all policies, regardless of place of purchase, should qualify for subsidies if the purchasers themselves qualify for subsidies, the groups write.
"We believe that our nation's agent and broker community can play a constructive and effective role in signing up currently uninsured Americans who would be eligible for purchasing assistance under this legislation," the groups write.
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