The House Energy and Commerce Committee Sept. 20 approved by a 26-14 vote a
that would help protect health insurance brokers from cuts in commissions
resulting from the medical loss ratio (MLR) provision of the Affordable Care
The Access to Professional Health Insurance Advisors Act (H.R. 1206),
introduced by Reps. Mike Rogers (R-Mich.) and Rep. John Barrow (D-Ga.) in 2011,
would exclude brokers' commissions from MLR calculations. The bill has 220
bipartisan co-sponsors. Barrow was the only Democrat on the Energy and Commerce
Committee to vote for the bill, while all 25 Republicans who were present at the
markup voted to approve it.
Similar legislation has been introduced in the Senate (S. 2288) by Sen. Mary
Landrieu (D-La.), and also has bipartisan support. No action has been scheduled
for the Senate bill.
Under the ACA, large group health insurance plans must spend at least 85
percent of premiums on medical claims or quality improvements, and small group
and individual plans must spend at least 80 percent. Plans that do not spend
that amount must refund the difference to consumers every year.
Because brokers' commissions are counted as administrative expenses under the
MLR provision, it has led insurers to reduce broker commissions to help prevent
paying rebates. Brokers' groups have called for Congress to approve legislation
excluding their commissions from the MLR calculation.
In May the National Association of Insurance and Financial Advisors, which
represents insurance brokers, released a report finding that 70 percent of
health insurance brokers had experienced decreased commissions since the MLR
took effect in 2011 (see previous article).
In a statement, Energy and Commerce Committee Chairman Fred Upton (R-Mich.)
said the bill “will help stem the negative impacts of the MLR on America's
agents and brokers, many of whom are small businesses. This bill will also
ensure families and employers continue to have access to qualified professionals
who can assist them in finding an affordable, high quality health plan.”
The administration argues that the MLR has helped keep health insurance
premiums lower by forcing insurers to operate more efficiently. The Department
of Health and Human Services June 21 estimated that 12.8 million policyholders
will benefit from $1.1 billion in rebates from health insurance plans that did
not spend as much as required on medical claims and quality improvements in 2011
(see previous article). The average family rebate was $151, HHS said.
At the markup, Energy and Commerce ranking member Henry Waxman (D-Calif.)
said H.R. 1206 “will increase the cost of health insurance.” Commissions have
traditionally been recognized as part of administrative costs, he said. “This
bill would reverse this, and cause the consumer to pay more for coverage or get
less in benefits,” he said. Nearly 90 percent of all insurers have met the MLR
requirement while continuing to pay agents and brokers, he said.
In addition, the bill would allow states to “effectively eliminate” the
provision, Waxman said. The ACA allows states to apply for waivers if they can
show that access to agents and brokers or to health insurance could be harmed by
the MLR, he noted. The bill would expand that provision by allowing states to
waive the provision without proving need, he said.
Ten states sought waivers from the provision in 2011 and 2012 but were turned
down by HHS, which ruled they had not shown the provision would reduce access to
agents and brokers, Waxman noted. If those waivers had been granted, premiums
would have been $360 million higher for about 4 million consumers in those
states, he said.
Consumer and patient groups also oppose the bill. Consumers Union released a
Sept. 19, Rebates Lost: Measuring the Impact of H.R. 1206 on Health Insurance
Rebates, which estimated that the legislation could cut rebates from $1.1
billion to as little as $378.8 million.
The American Cancer Society Cancer Action Network (ACS CAN) and the American
Heart Association issued a joint letter to House members Sept. 10 opposing the
bill. “Removing these sales costs from the MLR formula will reduce the incentive
for insurers to be more efficient and spend premium dollars for their intended
purpose--paying medical claims and improving care,” the groups said in the
letter, signed by ACS CAN President Christopher Hansen and Mark Schoeberl, the
heart association's executive vice president for advocacy and health
Janet Trautwein, chief executive officer of the National Association of
Health Underwriters, which represents about 100,000 health insurance agents and
brokers, said in a statement that the MLR is “having a devastating financial
impact on the country's approximately half-million licensed professional health
insurance agents and brokers, their employees, and millions of their employer
and individual clients. While we agree with the goal of providing consumers with
more value for health care dollars spent, the MLR requirements significantly and
negatively impact access to health insurance agents and brokers, at the very
time our economy and health care consumers need the most help,” she said.
America's Health Insurance Plans (AHIP), which represents about 1,300
insurers covering 200 million people, posted a blog on its website supporting
the legislation. The MLR “is not a real cost containment solution,” AHIP said.
“Soaring medical costs--not health plans' administrative costs--are driving
health care cost growth,” it said. Federal government data show that 96 percent
of the increase in premiums over the past five years was due to increased
spending on health care services, it said.
In addition, the provision “places an arbitrary cap on what health plans can
spend on a variety of programs and services that improve the quality and safety
of patient care, help patients navigate a complicated delivery system, and help
control soaring medical costs,” AHIP said.
The committee also approved by voice vote H.R. 1063, the proposed
Strengthening Medicare and Repaying Taxpayers Act, which would streamline the
process by which Medicare handles settlements from secondary payers in cases
such as auto accidents and liability settlements.
The Centers for Medicare & Medicaid Services issued an advance notice of
proposed rulemaking June 14, outlining conditions under which the agency would
not pursue reimbursements from beneficiaries who receive such settlements
(see previous article).
By Sara Hansard
Information on H.R. 1206 and H.R. 1063 is at http://energycommerce.house.gov/markup/full-committee-vote-hr-1206-and-hr-1063.
Rebates Lost: Measuring the Impact of H.R. 1206 on Health Insurance
Rebates is at http://yourhealthsecurity.org/wp-content/uploads/2012/09/Rebates_Lost.pdf.