State Insurance Regulators To Vote Whether to Boost Insurer Profits at Consumers’ Expense

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Washington DC – State insurance regulators will vote on Tuesday whether to deny consumers an estimated $1.1 billion in health insurance premium rebates nationally. The group appears set to approve a resolution sponsored by the insurance sales lobby and insurance companies aimed at gutting limits on wasteful bureaucracy, executive salaries and excessive profits.
Consumers in Florida would lose an estimated $142 million in annual premium rebates if the insurance industry is freed from the new efficiency standards in the federal health reform law, according to a study by the Senate Commerce Committee. (See the study linked below)

Florida Insurance Commissioner Kevin McCarty is carrying the industry-backed resolution before the National Association of Insurance Commissioners. He is presumably acting at the behest of Gov. Rick Scott, an avowed opponent of any federal health reform.

The resolution asks federal regulators and Congress to remove broker pay from the medical loss ratio rule of the federal health reform law. This would render meaningless the law’s requirement that companies spend 80% to 85% of health premiums on actual health care, by restricting overhead, salaries, commissions and profit, said Consumer Watchdog. The backing of the National Association of Insurance Commissioners (NAIC) would give a veneer of respectability to the proposal and hide its lobbyist roots.
“This vote will expose which state insurance regulators work for the insurance industry, and which take seriously their job to protect citizens. Hanging in the balance is over $1 billion in consumer premium rebates that heath insurance companies will owe next year alone,” said Carmen Balber, Washington DC director for Consumer Watchdog.
Backers of the resolution before the NAIC assert that health reforms will drive brokers and agents out of business and leave consumers without “professional advisers” in choosing and dealing with insurance companies. However, all credible data says otherwise, said Consumer Watchdog.
The resolution would harm consumers.
– Consumers will lose an estimated $1.1 billion in rebates next year alone, and face higher premiums from health insurance companies.

It solves a problem that doesn’t exist – consumer access to brokers.
– The NAIC surveyed states that already have a medical loss ratio at or near the federal standard. Not a single consumer had trouble accessing an insurance broker in these states.  

The resolution would gut the medical loss ratio that is driving down health insurance premium increases.
– For example, Aetna in Connecticut announced an average 10% decrease in premiums to meet the new efficiency standards. Such savings would be eliminated.

The plan is very unlikely to protect broker compensation.
– The resolution contains no assurance that insurance companies must pay brokers more. Insurers are far more likely to book any windfall from the change as profits, according to insurance commissioners who oppose the regulation.

State insurance regulators opposing the broker resolution include: California, Connecticut, District of Columbia, Minnesota, New York, Oregon and Washington.
State regulators that have co-sponsored the broker resolution include: Florida, Alabama, Arkansas, Delaware, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Utah and Wisconsin.
The U.S. Senate Commerce committee issued a report using data produced by the NAIC that showed the portion of premium rebates consumers in each state would lose if the resolution became law. That state-by-state accounting of consumer losses can be downloaded here:
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Consumer Watchdog is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, CA. Find us on the web at:

Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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