House Panel Passes MLR Bill

This provision limits administrative costs in health insurance premiums to 15 percent for large groups and 20 percent for small groups. As a result, agents say their commissions have been cut  by up to half on health insurance products.

The House panel acted in reaction to a hearing in September of last year where "witnesses testified that the MLR rule has created a 'desperate economic situation' for a half-million insurance agents and brokers," according to information provided members of the committee at the markup.

"This requirement could force agents to leave the market or significantly limit their plan offerings, creating a level of disruption that would quickly destabilize the market and threaten the ability of insurers to continue offering plans," the document said.

The Independent Insurance Agents and Brokers of America (IIABA) issued a statement voicing strong support and urging prompt passage.

Ray Young, IIABA senior director of federal government affairs, said that, "If the MLR calculation is not quickly corrected to exclude agent compensation, consumers will suffer the prospect of losing the professional, licensed guidance of insurance agents during this time of great change in the health insurance market."

He added that, "This damaging regulation has already had tremendously negative effects."

Ethan Rome, executive director of Health Care for America Now, said his group, which advocates for health care beneficiaries, will strongly oppose the bill. He cited the fact that under the law, the Patient Protection and Affordable Care Act, premiums were reduced and, in cases where they weren't, consumers received $1 billion in rebates for noncompliance for 2011, the first year the provision was in effect.

"This is a brazen attempt to pick the pockets of consumers and give $1 billion back to insurance carriers," Rome said.

"The only reason consumers got their rebate was that health insurance carriers couldn't play by the rules and meet a fair target for spending premium dollars on healthcare," he added.

Janet Trautwein, CEO of the National Association of Health Underwriters, said that, "Recognizing the negative impact the MLR provision is having on agent and brokers, subcommittee members voted via voice vote to help these small business people preserve jobs. Millions of individuals and small businesses depend on licensed agents and brokers to help them navigate the healthcare marketplace and find health plans that suit their needs and budgets."

Trautwein added that, "The bipartisan measure already has 218 co-sponsors in the House and a companion bill in the Senate (S. 2288). NAHU looks forward to its continued work with policy makers on this important bipartisan effort."