CBO: Agent comp bill could add $1.1 billion to deficits

H.R. 1206 could increase health insurance premiums by 0.2 percent on average over the next few years and 0.1 percent in later years, the analysts said.

"Because MLR requirements would be easier to achieve under H.R. 1206, insurers would have less incentive to reduce administrative costs than under current law," the analysts said. "Both of these effects are expected to result in an increase in premiums relative to current law."

H.R. 1206 also could increase premiums by encouraging states to ask the U.S. Department of Health and Human Services (HHS) for waivers of the MLR requirements, the analysts said.

For consumers, the bill could cut rebate payments by 60 percent to 70 percent at the beginning and by about 40 percent to 50 percent later, the analysts said.

Because health insurance premiums would be a little higher, the federal government could end up spending a little more on PPACA health insurance purchase subsidies for low-income and moderate-income consumers, the analysts said.

H.R. 1206 could reduce federal income tax revenue by increasing the price employers pay for health coverage and increasing the amount of health insurance spending employers can deduct from their taxable income, the analysts said.

Diane Boyle, a vice president at the NAIFA, said in a comment on the CBO report that letting health insurance premiums rise an additional 0.1 percent to 0.2 percent would be a small price to pay for giving consumers access to help from licensed agents.

"The point of the MLR ratio was to ensure consumers received value for their premium dollars, not to offer a rebate," Boyle said. "Without a fix, the current law puts American consumers, businesses and families at risk. They will be left without advocates to assist with coverage or claims problems and without professionals to assist in the economical selection of benefits tailored to fit their needs."

Janet Trautwein, the chief executive officer of the National Association of Health Underwriters (NAHU), said she wishes the CBO analysts could have included the value of the benefits that agents and brokers provide as well as an estimate of the impact of H.R. 1206 on federal spending and revenue.

"Health insurers report that agent-placed health insurance business has better retention rates and fewer claims issues because of the help agents and brokers provide," Trautwein said. "With employers, agents and brokers help companies incorporate cost-saving programs like wellness plans, reduce compliance costs and negotiate savings at contract renewal time."

The new PPACA MLR requirements may end up increasing overall health care costs in the long run, because they are discouraging health plans from investing in programs that could lower the cost of care and improve the quality, Trautwein said.

Elizabeth Festa contributed to this report.

See also:

• MLR bill passes House Energy & Commerce Committee
• MLR Killing Off Business, Hurting Consumers, NAIFA Survey Says
• Action Set on MLR Bill