COLUMBUS, OH – Ohio Lieutenant Governor and Department of Insurance Director Mary Taylor co-sponsored an NAIC resolution that passed Tuesday urging the U.S. Department of Health and Human Services (HHS) and Congress to address the negative impact of Obamacare on insurance agents and brokers.
Specifically, the resolution calls on HHS to remove agent and broker commissions from the administrative side of the medical loss ratio (MLR) calculation while placing an immediate hold on implementation and enforcement of the MLR requirements relative to independent agent and broker compensation.
“The inclusion of agent and broker commissions in the administrative side of the MLR harms more than 270,000 agents and brokers operating small businesses in Ohio,” Taylor said. “At a time of uncertainty and rapid change in the health insurance market, it also reduces the likelihood these valuable insurance experts will be around to help individual and small business consumers.”
A recent study by the Bureau of Labor Statistics found the number of health insurance agent and broker jobs decreased by 3.3 percent nationally during the first half of 2011 alone. In addition, a Government Accountability Office report released in August 2011 reported almost all of the insurers they interviewed were reducing commissions and making adjustments to premiums in response to MLR requirements.
Under the new federal MLR requirements, insurance companies are limited in the amount of funds that can go toward administrative costs. The new standards require insurance companies to spend 80 percent of premiums on claims and the remaining 20 percent on administrative costs. If commissions remain part of the administrative costs, there is growing concern for how agents and brokers fit into these new calculations.
NAIC members are urging action by HHS because of the wide range of services licensed agents and brokers provide to both individual and business consumers of all sizes. While working with insurance companies, they acquire quotes and analyze plan options in order to determine the best coverage for their clients. They also provide ongoing service to help their clients utilize and optimize their coverage effectively.
Because the NAIC works with the federal government on a number of insurance issues, the resolution sends a strong message that changes should be made. To date, the NAIC has continually expressed concern over the MLR standards and their negative impact on agents and brokers.