"It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness." So began Charles Dickens in "A Tale of Two Cities." Although the great novelist was writing about the French Revolution, he could also have been describing the health insurance industry after the passage of the Patient Protection and Affordable Care Act of 2010 (PPCA).
I'll leave it to others to debate the wisdom of this law. But one aspect–its effect on agent commissions–has clearly been catastrophic. As you've probably heard, this is due to the minimum loss ratio provisions in the reform bill. According to the PPAC, health insurance companies must use at least 80 percent of individual premiums and 85 percent of group premiums to pay for care (or efforts to improve care). This means they can use only 15 percent to 20 percent of premiums for administrative purposes, including agent commissions.
