Congress urged to leave health law's medical loss ratio alone

Dozens of healthcare and patient advocacy groups have signed on to a letter urging Congress to reject efforts to protect the fees and commissions paid to health insurance agents and brokers.

The letter comes after the National Association of Insurance Commissioners voted last month to recommend that federal regulators stop counting the fees as administrative expenses when calculating the healthcare reform law's medical loss ratio (MLR). The MLR provision requires health plans to spend at least 80 percent of premiums on medical care or give customers rebates.

"The MLR is a powerful tool to control health insurance premiums," the letter reads, and the proposed change could cost consumers more than $1 billion in lost rebates.

The state commissioners' controversial 26-20 vote did not endorse any specific bill. Pending legislation in Congress, however, would exclude insurance agents' sales and commissions from calculation of the MLR formula.

"Although we agree that consumers and employers who want to use agents and brokers should continue to have access to them," the letter continues, "our consumer groups have heard few, if any, concerns from the public about decreased access to health insurance producers.

"The NAIC’s own findings suggest that consumers have reported no problems accessing broker services in states with MLR requirements that pre-date the Affordable Care Act. Further, removing agent and broker commissions from the MLR does nothing to guarantee that insurers will use the redirected rebate money to increase their payments to insurance agents and brokers. They could just as easily devote that spending toward other administrative costs, like marketing, salaries or profit."

The Department of Health and Human Services issued final regulations last week confirming that the fees and commissions should be counted as administrative expenses.

---