NAIC Panel Seeks More Info Before Backing Agent MLR Exemption

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State insurance regulators delayed for at least four weeks action on a resolution that would support the demand by insurance agents for an exemption from the medical loss ratio (MLR) provision of the health care reform law.

The National Association of Insurance Commissioners' Professional Health Insurance Advisors Task Force took the action late Sunday. The meeting was held as a prelude to the NAIC Spring Meeting, being held in Austin, Texas this week.

The panel decided to ask the NAIC staff to provide substantial data that it will use to decide whether to support the request by insurance agents, brokers and health insurance companies for a resolution backing House legislation that would exempt agent commissions from the MLR.

The agents and brokers want the NAIC to endorse H.R. 1206, the "Access to Professional Health Insurance Advisors Act of 2011." The legislation is sponsored by Rep. Mike Rogers, R-Mich., and Rep. John Barrow, D-Ga.

Sandy Praeger, Kansas insurance commissioner and chair of the Health Insurance Advisors Task Force, said after the meeting, "This was the right thing to do. We need to base our decisions on appropriate data."

Beth Mantz Steindecker, a health care analyst at Washington Analysis, says the decision "is not fatal" to the intensive efforts by agents and brokers to be exempted from the MLR.

The agents, led by the National Association of Health Underwriters, the Independent Agents and Brokers of America, the National Association of Professional Insurance Agents, and the National Association of Insurance and Financial Advisors, say that insurance companies have used the authority provided under the MLR provision to cut their commissions as much as 50 percent this year.

Steindecker acknowledges that NAIC support is a "key factor" in building momentum for House action. But a greater hurdle will be the Senate, she says.

"House support will be important, but the Senate is a key obstacle because Senate liberals, led by Sen. John Rockefeller, D-W. Va., and Sen. Tom Harkin, D-Iowa, are key opponents of any change to the law," she says.

In fact, Rockefeller and Sen. Al Franken, D-Minn., wrote letters to the panel asking the NAIC not to pass the resolution.

In his letter, Sen. Rockefeller calls the MLR a key "pro-consumer" provision of the health care law, the Patient Protection and Affordable Care Act.

"Agents and brokers play a role in helping American consumers and businesses purchase health insurance," Rockefeller says in the letter.

"But I won't support a proposal that allows those same agents, brokers and health insurance companies to pocket $1 billion in benefits that should instead be going to the benefit of American consumers as part of the health care reform law we approved last year."

Praeger acted after commissioners from such states as California, Illinois, Oregon, Washington and Connecticut voiced opposition.

Support for the provision is being led by Florida Insurance Commissioner Kevin McCarty, who is also seeking to exempt insurers in Florida from all cost-control provisions of the PPACA.

David Eppstein, PIA assistant vice president for regulatory affairs, says:
"There is already ample evidence that agent and broker compensation has been negatively affected as a direct result of the Department of Health and Human Services's failure to exclude it from MLR calculations. We are hopeful that the Health and Managed Care Committee, chaired by Commissioner Praeger, will act quickly to allay any concerns and that the NAIC will just as quickly endorse legislation to remove producer compensation from medical loss ratio calculations."

But officials of Consumer Watchdog, a California-based consumer advocacy group, laud the panel's decision.

"Without the united backing of the state insurance commissioners, the legislation's special-interest authorship is laid bare and its aim–to protect large percentage commissions on health insurance sales–is easier to detect," says Judy Dugan, Consumer Watchdog research director. "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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