Connecticut Is Among States Praised By A Consumer Group For Opposing Bill That “Would Raise Health Insurance Premiums”

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A national consumer group says a bill before Congress would increase the price of health insurance by allowing insurers to exclude broker commissions when calculating what portion of premiums is spent on patient medical expenses versus administrative costs. 

The California-and-Washington, D.C.-based Consumer Watchdog praised a task force at the National Association of Insurance Commissioners for holding off support of the bill, at least for the time being, during a meeting on Sunday in Austin, Texas. 

Connecticut was praised by the consumer group as one of the states against the legislation, according to Consumer Watchdog. Insurance Commissioner Thomas Leonardi is representing Connecticut at the NAIC's national meeting. The NAIC held a public hearing, but not a vote, Connecticut Insurance Department spokeswoman Donna Tommelleo said.

At stake is the price of health insurance in the future. Federal healthcare reform signed last year by President Obama requires health insurers to spend a minimum amount of every $1 earned in premiums on patients' medical expenses. Insurers must spend 80 cents on the dollar for individual and small-group plans, 85 cents for large-group plans. The fraction spent on medical expenses is known in the industry as "medical-loss ratio," or MLR.

Starting this year, if health insurers spend less than the 80 cent or 85 cent minimum, they are required to pay consumers a rebate at the end of the year. Two of the many questions facing regulators — what is considered a medical expense and what is considered the insurer's administrative cost?

If fewer expenses are considered administrative costs, or if more expenses are included as medical expenses, health insurers will have an easier time meeting the federal standard set in health reform laws passed last year.

The bill before Congress is called Access to Professional Insurance Advisors Act of 2011, and had NAIC support up until a meeting late Sunday at the association's national meeting in Austin. Leonardi opposed bringing the resolution to a vote. Instead, he said a task force should examine the issue and report their findings in six weeks.

"We must have a very clear understanding of how the resolution would affect the consumer before we can move forward," Leonardi said. "To date, I have not seen any hard data that showes whether the MLR is the reason the broker commissions have decreased. I do appreciate the value of brokers in the system and fully understand their concerns, but to rush this issue to a vote this weekend would be imprudent and would abandon the NAIC's traditionally deliberate and fact-based approach."

Judy Dugan, research director for the nonprofit Consumer Watchdog. "We applaud the consumer-focused state commissioners who made their doubts known. They put the brakes on an industry pay bonus from the pockets of consumers and taxpayers."

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