A divided NAIC approves resolution for medical-loss ratio
Protection for agent, broker fees approved
“The narrowly divided vote of insurance commissioners elevated politics over the sound, evidencebased decisionmaking that is expected of us as insurance regulators.”
— Dave Jones, California insurance commissioner
Asplit National Association of Insurance Commissioners approved a resolution that calls for Congress and federal health officials to make exceptions under medicalloss ratio rules for insurance agent and broker commissions.
The resolution passed with five abstentions and the approval of 26 commissioners. Twenty commissioners rejected the resolution, including California’s Dave Jones, who said in a statement that the “narrowly divided vote of insurance commissioners elevated politics over the sound, evidence- based decisionmaking that is expected of us as insurance regulators.”
The resolution asks HHS to “take whatever immediate actions” possible, including approval of state plans to adjust the medicalloss ratio rules or designating some agent and broker compensation as healthcare quality expenses. It also asks HHS to immediately suspend enforcement of agent and broker compensation-related rules.
The 2010 Patient Protection and Affordable Care Act includes such compensation among insurers’ administrative expense. The law’s medical-
loss ratio provision requires that small group insurers spend at least 80% of premiums to cover medical care and quality costs. Large group insurers must spend at least 85% of premiums on medical and quality expenses. Consumers receive rebates under the law when insurers exceed the ratios.
Jones challenged HHS’ authority to make requested changes, as the resolution requested, and said rebates to consumers would drop by $1.1 billion under the resolutions’ proposals.
The resolution, which states that brokers and agents offer needed guidance but could see compensation squeezed by the medicalloss provision, also asks Congress to consider legislative changes.
Response to the resolution was as divided as the commissioners’ vote.
The measure won the endorsement of the America’s Health Insurance Plans, the industry’s largest trade group. “The current MLR regulation threatens to disrupt the coverage that many individual and small group customers have today as well as threaten consumers’ and small employers’ access to the guidance of a trusted and experienced health benefits adviser,” AHIP spokesman Robert Zirkelbach said in an e-mail.
Consumers Union, an advocacy group, sharply criticized the resolution as a threat to the strength of new rules to protect consumers.
“The NAIC has worked diligently and openly to balance the interest of all stakeholders in implementing the Affordable Care Act since the law’s passage,” Lynn Quincy, NAIC consumer representative and Senior Policy Analyst at Consumers Union, said in a statement. “Today’s decision is a significant departure from the laudable process used by the NAIC in most other areas.”