Insurance commissioners back changes to healthcare law’s MLR standard

After more than a year of debate, state regulators Wednesday approved a resolution calling for changes to the healthcare reform law’s medical loss ratio provision.

The National Association of Insurance Commissioners (NAIC) passed the measure 26-20, over strenuous objections from commissioners who said the process and the resolution itself would undermine the NAIC’s reputation.

“I think going too far in this resolution puts our credibility in jeopardy, and I think in the long run we all could suffer the consequences of that,” Kansas Insurance Commissioner Sandy Praeger said Wednesday during the NAIC’s 90-minute debate.

The resolution calls on Congress to consider bills that would exempt insurance agents’ commissions from insurers’ medical loss ratios (MLR). The healthcare law requires health plans to meet an 80 percent or 85 percent MLR, meaning they must spend 80 percent or 85 percent of their premiums on medical costs rather than profit and administrative expenses.

The NAIC measure also states that the Department of Health and Human Services should take “whatever immediate actions” it can to preserve access to agents and brokers, including “an immediate hold on implementation and enforcement” of the MLR rules. Praeger said she was concerned that the resolution was asking HHS to do something it can’t legally do.

Agents and brokers have been pushing the issue for more than a year. They’re concerned that once the MLR caps insurers’ administrative expenses, the companies will squeeze commissions to free up cash for other uses. They had previously pressed the NAIC to endorse a bill, sponsored by Rep. Mike Rogers (R-Mich.), to exclude commissions from the definition of administrative expenses. The resolution passed Wednesday stops short of endorsing that specific bill.

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