State Insurance Regulators’ Vote to Pad Broker Income and Insurer Profits at the Cost of Billions in Higher Health Insurance Premiums and Lost Rebates for Consumers

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Washington, DC — With no public discussion and on a voice vote, a task force of state insurance regulators with the National Association of Insurance Commissioners (NAIC) voted to endorse legislation that would cost consumers billions in higher health insurance premiums and lost rebates under the federal health reform law. Consumer Watchdog condemned the move to gut a central consumer protection of the Affordable Care Act and called on the full NAIC to reject the plan.

The legislation, written by lobbyists for insurance brokers, would preserve broker sales commissions and benefit the bottom line of insurance companies at the expense of consumers. The bill, proposed in Congress as HR 1206 (Rogers), would change the federal health reform law to allow insurance companies to exclude broker commissions from their administrative costs when calculating how much they spend on actual health care.

“This plan is a broker pay bonus and insurance industry profit boost that will come straight from the pockets of consumers and taxpayers. The insurance regulators who voted for this plan sold consumers in their states down the river by endorsing higher health insurance premiums and millions in lost rebates to benefit their friends in the insurance industry,” said Carmen Balber, Washington director for Consumer Watchdog.

In a letter submitted to insurance regulators this week, Consumer Watchdog noted that the bill would severely weaken the only explicit consumer cost protection in the federal health reform law – the requirement that health insurance companies spend at least 80% of consumers’ premiums on medical care. The letter debunked efforts by supporters of the plan to suggest that the proposal is anything more than a gift to the health insurance and insurance sales industries. Supporters claim that change is necessary to prevent consumers from having difficulty finding professional advice when purchasing insurance.

“The proposal does nothing to protect or benefit consumers in any way,” wrote Consumer Watchdog. “Any change in accounting for broker income will have certain and negative effects on the consumer protections of the medical loss ratio standard. [A report by NAIC actuarial experts] also found no evidence that, even if broker commissions were to fall, consumer access to professional advice on health insurance issues would diminish. In fact, to our knowledge not one state has identified a consumer or business who complained or sought help from the department of insurance or elsewhere because they were unable to obtain the assistance of a health insurance adviser.”

Read Consumer Watchdog’s comment letter:

A majority of state insurance commissioners have ties to the insurance industry, according to a conflict of interest analysis conducted by Consumer Watchdog. Twenty-four state commissioners came from the insurance industry and eight were elected with campaign contributions from the industry. Six presidents of the NAIC since 2000 took jobs in the industry and two of them are the chief Washington lobbyists of their companies. See the Consumer Watchdog analysis here:

“This special interest proposal is not a small tweak to fix a mistake in the health reform law. It is an attack on health reform’s central requirement that insurance companies eliminate excessive overhead spending and profits,” said Balber. “Consumers can only hope that today’s vote reflects the views of a small minority of commissioners and that most state insurance regulators will reject a plan to protect broker incomer and insurer profits at the expense of affordable health insurance.”

Today’s vote was taken by the NAIC’s Professional Health Insurance Advisors Task Force, and was a recommendation to the NAIC’s executive director that the NAIC endorse HR 1206. However a decision with such dramatic negative consequences for consumers should not be decided by a minority of regulators, and should be considered and voted on by the full membership of the NAIC, said Consumer Watchdog.

The Chair of the Task Force, Florida Insurance Commissioner Kevin McCarty called for a voice vote which meant no individual commissioner’s vote was recorded. However, West Virginia Commissioner Cline voted no, and North Carolina Commissioner Goodwin abstained. Other regulators present for the vote included representatives from: Alaska, Kansas, Louisiana, Mississippi, Montana, North Dakota, New Hampshire, Vermont, West Virginia and Wisconsin. No public comment was allowed on the call.

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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. 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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