WASHINGTON BUREAU –Republicans and at least one Democrat criticized the Affordable Care Act minimum loss ratio (MLR) requirement today at a legislative meeting organized by the Council of Insurance Agents and Brokers (CIAB).
If enforced as written, the MLR provision of the Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) – will require health insurers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.
Insurance producers – and state insurance regulators — have argued that the current MLR rules could hurt consumers, by encouraging health insurers to cut producer commissions and reducing consumers' ability to get help with coverage from licensed agents and brokers.
SEN. SUSAN COLLINS
Sen. Susan Collins, R-Maine, said the current version of the MLR rules "may not allow insurers to properly administer" health care plans, and may end up increasing overall health care costs.
The MLR rules also could hurt small insurers and force them to leave the market, 
Collins said.
Collins said she is very much concerned about the pressure the MLR rules are putting on the commissions paid to health insurance agents and brokers.
Collins also:
- Noted that she has voted for a "1099 fix measure." The measure would repeal an Affordable Care Act provision that would require businesses to use a Form 1099 whenever they spend more than $600 in a year on buying goods and services from a vendor. The measure has bipartisan support, and the 1099 reporting requirement likely will be repealed before it is set to take effect in 2012, Collins said.
- Expressed support for reversing a new, $2,500 cap on flexible spending account (FSA) contributions included in the Affordable Care Act, and for reversing a related provision banning use of FSA funds to pay for over-the-counter drugs not prescribed by a physician. The OTC drug provision already has taken effect; the FSA contribution cap is set to take effect in two years. Each employer now sets its own FSA contribution limit.
REP. ED ROYCE
Like Collins, Rep. Ed Royce, D-Calif., a leading Democrat on the House Financial Services Committee, criticized the Affordable Care Act MLR provision.
Price controls always cause problems, and the MLR provision is
arbitrary, Royce said.
Legislation excluding producer commissions from MLR calculations will pass in the House but faces an uncertain fate in the Senate, Royce said.
Royce has long been a supporter of efforts to pass an "optional federal charter" (OFC) bill that would give insurers the ability to choose between being regulated by state insurance commissioners or a new federal insurance regulatory system.
An OFC system could reduce health care costs by creating national health insurers, Royce said.
Other officials at the meeting said Royce and Rep. Jim Himes, D-Conn., another speaker at the CIAB event, would be meeting today to decide whether to introduce OFC legislation.
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