- Staff
- #21
look what I found in my email......nothing but warm and fuzzys....
Legislative Alert: Future of Brokers' Commissions
Dear Scott,
On September 15, 2011, the House Energy and Commerce Subcommittee on Health heard testimony regarding the treatment of Brokers' commissions in the Medical Loss Ratio (MLR) portion of the Patient Protection and Affordable Care Act (PPACA), as well as the effect the interim final rules on grandfathering will have on the health insurance marketplace (specifically, the MLR Repeal Act of 2011, HR 2077).
Subcommittee Chair Joseph R. Pitts (R-PA) provided the opening remarks, quoting President Obama:
Grandfathering Pros and Cons
Steve Larsen, director of the Center for Consumer Information and Insurance Oversight of the Centers for Medicare and Medicaid Services, Department of Health and Human Services (HHS), provided the subcommittee with arguments in favor of PPACA's grandfathering and MLR provisions. Despite his concise and systemic defense, his testimony failed to break new ground on the issues.
Testifying on behalf of the Galen Institute was President Grace-Marie Turner who said, "It is in the interest of both employers and employees to keep health costs down, and the grandfathering regulations issued by HHS restrict their ability to do that." Her testimony provided several key observations2:
Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), urged subcommittee members to find a quick and bipartisan solution to the MLR problem. "The economic outlook for many health insurance agents and brokers across the country continues to be bleak," she said. "As health insurance companies renew and revise their agent and broker contracts for the upcoming year, it is clear the financial situation for many of these business owners is getting worse."3
She continued, "I am here to save agent and broker jobs and preserve individual consumer and employer access to professional health insurance advocates. I am not here to score political points. There are too many American businesses at stake."4
Trautwein summarized her powerful testimony by stating:
"Removing agent and broker pass‐through commissions from the MLR calculation would restore economic stability for licensed health insurance advisors nationally and it would benefit health insurance consumers and health insurance markets. Exempting the pass‐through fees would preserve existing cost‐saving practices by the producers in the current health insurance market, furthering the intent of the PPACA MLR provisions to reduce overall spending on administrative costs. At the same time, it would preserve important operational conveniences and consumer protections for small businesses and individuals. Finally, eliminating independent producer commissions from the MLR calculation will go a long way toward providing uniform and needed relief to all health insurance markets – and the consumers who reside within them – during the transitional period as PPACA requirements are fully implemented over the next three years."5
She also said that NAHU supported the passage of HR 1206 as well as the repeal of PPACA and subsequent rules via HR 2077.
Wendell Potter of the Center for Public Integrity expressed support of PPACA's treatment of the grandfather issue, while continuing his attacks on the health insurance industry. His testimony was consistent with prior statements made on the MLR issue as a National Association of Insurance Commissioners' consumer representative.6 He portrayed the health insurance industry as being rapacious and one that must be regulated to the highest extent.
"The top priority of for-profit companies is to drive up the value of their stock," Potter said. "Wall Street's dictates determined whether millions of American families would be offered coverage, whether they could keep it, and how much they would be charged for it, but ignores the fact that large segments of the large health insurance carriers are not-for-profits."7
Finally, Lynn Bates Quincy, senior policy analyst for the Consumers Union, in her testimony stated, "The proposed legislation would broaden the definition of what qualifies as a grandfathered plan and calls for a blanket exemption from all PPACA requirements. If enacted, this proposal would reduce access to valuable new consumer protections."8 She further noted, "The proposed legislation not only broadens the definition of grandfathered plan but also expands the list of consumer protections that would no longer apply."9
According to Bates, "Proposals to repeal or weaken the MLR rule should be rejected. These proposals would raise premiums for consumers. In 2014, that means increasing the need for tax-payer financed subsidies. The current MLR provision is working and should be retained. The current MLR rule is providing a value for consumers in the form of lower premiums and more medical care for their premium dollar."10
Chairman Pitts summarized the issues by stating:
BenefitMall recognizes that these are significant issues that go to the very heart of how Brokers can support their clients. It is encouraging that these hearings are being held, but the short-term reality is that HR 2077 will not proceed beyond the U.S. House of Representatives. We will continue to bring these issues to your attention.
Please visit www.BenefitMall.com to view past Legislative Alerts. Or, you may visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources.
Sincerely,
Michael Gomes
Executive Vice President
Legislative Alert: Future of Brokers' Commissions
Dear Scott,
On September 15, 2011, the House Energy and Commerce Subcommittee on Health heard testimony regarding the treatment of Brokers' commissions in the Medical Loss Ratio (MLR) portion of the Patient Protection and Affordable Care Act (PPACA), as well as the effect the interim final rules on grandfathering will have on the health insurance marketplace (specifically, the MLR Repeal Act of 2011, HR 2077).
Subcommittee Chair Joseph R. Pitts (R-PA) provided the opening remarks, quoting President Obama:
- On July 21, 2009, Obama stated, "If you like your current plan, you will be able to keep it. Let me repeat that: If you like your plan, you'll be able to keep it."
- He also said in April of 2010, "If you like your insurance plan, you will keep it. No one will be able to take that away from you. It hasn't happened yet. It won't happen in the future."
Grandfathering Pros and Cons
Steve Larsen, director of the Center for Consumer Information and Insurance Oversight of the Centers for Medicare and Medicaid Services, Department of Health and Human Services (HHS), provided the subcommittee with arguments in favor of PPACA's grandfathering and MLR provisions. Despite his concise and systemic defense, his testimony failed to break new ground on the issues.
Testifying on behalf of the Galen Institute was President Grace-Marie Turner who said, "It is in the interest of both employers and employees to keep health costs down, and the grandfathering regulations issued by HHS restrict their ability to do that." Her testimony provided several key observations2:
- While most companies initially hoped they would be able to preserve much of their existing group health plans under the new grandfather provisions, a survey by Aon Hewitt Consulting found almost all will not. The Administration's own estimates indicate most employers will not be able to maintain grandfathered status.
- The grandfathering rules box employers into a corner. They cannot make changes or implement minor modifications to their health plans to keep costs down without being forced to comply with expensive PPACA regulations that increase their health costs.
- Health costs are directly related to creation of new jobs. Higher health costs put
additional pressures on the employer's bottom line and increase the cost of hiring new workers, in turn discouraging job creation. This is not good news for the economy or for unemployed workers.
Janet Trautwein, CEO of the National Association of Health Underwriters (NAHU), urged subcommittee members to find a quick and bipartisan solution to the MLR problem. "The economic outlook for many health insurance agents and brokers across the country continues to be bleak," she said. "As health insurance companies renew and revise their agent and broker contracts for the upcoming year, it is clear the financial situation for many of these business owners is getting worse."3
She continued, "I am here to save agent and broker jobs and preserve individual consumer and employer access to professional health insurance advocates. I am not here to score political points. There are too many American businesses at stake."4
Trautwein summarized her powerful testimony by stating:
"Removing agent and broker pass‐through commissions from the MLR calculation would restore economic stability for licensed health insurance advisors nationally and it would benefit health insurance consumers and health insurance markets. Exempting the pass‐through fees would preserve existing cost‐saving practices by the producers in the current health insurance market, furthering the intent of the PPACA MLR provisions to reduce overall spending on administrative costs. At the same time, it would preserve important operational conveniences and consumer protections for small businesses and individuals. Finally, eliminating independent producer commissions from the MLR calculation will go a long way toward providing uniform and needed relief to all health insurance markets – and the consumers who reside within them – during the transitional period as PPACA requirements are fully implemented over the next three years."5
She also said that NAHU supported the passage of HR 1206 as well as the repeal of PPACA and subsequent rules via HR 2077.
Wendell Potter of the Center for Public Integrity expressed support of PPACA's treatment of the grandfather issue, while continuing his attacks on the health insurance industry. His testimony was consistent with prior statements made on the MLR issue as a National Association of Insurance Commissioners' consumer representative.6 He portrayed the health insurance industry as being rapacious and one that must be regulated to the highest extent.
"The top priority of for-profit companies is to drive up the value of their stock," Potter said. "Wall Street's dictates determined whether millions of American families would be offered coverage, whether they could keep it, and how much they would be charged for it, but ignores the fact that large segments of the large health insurance carriers are not-for-profits."7
Finally, Lynn Bates Quincy, senior policy analyst for the Consumers Union, in her testimony stated, "The proposed legislation would broaden the definition of what qualifies as a grandfathered plan and calls for a blanket exemption from all PPACA requirements. If enacted, this proposal would reduce access to valuable new consumer protections."8 She further noted, "The proposed legislation not only broadens the definition of grandfathered plan but also expands the list of consumer protections that would no longer apply."9
According to Bates, "Proposals to repeal or weaken the MLR rule should be rejected. These proposals would raise premiums for consumers. In 2014, that means increasing the need for tax-payer financed subsidies. The current MLR provision is working and should be retained. The current MLR rule is providing a value for consumers in the form of lower premiums and more medical care for their premium dollar."10
Chairman Pitts summarized the issues by stating:
- "Again, while the MLR has been billed as a tool to protect consumers from insurance companies, many states are clamoring for waivers to exempt their citizens from these protections."
- The Secretary of HHS is empowered to grant MLR waivers to states that can prove that meeting the 80 or 85 percent thresholds will destabilize its insurance market.
- Currently, HHS has granted MLR waivers to five states – Maine, New Hampshire, Nevada, Kentucky, and Iowa. With these waivers, consumers in these states are now protected from one of the health care law's key "consumer protections."
- Residents of North Dakota and Delaware are not as lucky. HHS rejected their waivers.
- Nine more states – Florida, Georgia, Louisiana, Kansas, Indiana, Michigan, Texas, Oklahoma, and North Carolina – have determined their insurance markets will be destabilized by having to comply with the MLR regulation.
BenefitMall recognizes that these are significant issues that go to the very heart of how Brokers can support their clients. It is encouraging that these hearings are being held, but the short-term reality is that HR 2077 will not proceed beyond the U.S. House of Representatives. We will continue to bring these issues to your attention.
Please visit www.BenefitMall.com to view past Legislative Alerts. Or, you may visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources.
Sincerely,
Michael Gomes
Executive Vice President
.
