A bipartisan bill that would separate broker compensation from the medical law ratio under the Patient Protection and Affordable Care Act (PPACA) is earning praise from brokers and agents who have argued that the law's provision is threatening their livelihood.
The Access to Professional Health Insurance Advisors Act — H.R. 2328 — introduced Wednesday by Reps. Mike Rogers, R-Mich., and John Barrow, D-Ga., would clarify that broker compensation is not part of the medical loss ratio calculation as enacted in PPACA.
PPACA dictates health insurers must spend at least $.80 of every dollar in premiums on actual health care costs in the individual and small group markets, and $0.85 in the large group market. To comply with the law, insurers have to cut back on commissions — making it impossible for many brokers to continue the way they do business as is.
The MLR requirement went into effect Jan. 1, 2011.
The association Independent Insurance Agents & Brokers of America this week praised the bill saying the legislation would "preserve consumer access to agents and brokers."
"Since going into effect more than two years ago, the MLR regulations have had a detrimental impact on agents and brokers," Charles Symington, IIABA senior vice president for external and government affairs said in a statement.
The impact of the MLR rules on agents and brokers has been damaging since many insurance carriers have significantly cut their agent compensation to comply with the regulations.
"This means jobs are being cut, agents and brokers are beginning to disappear, and small businesses and individuals are having a harder time accessing affordable insurance," Rogers said this week.
IIABA argued that in turn the MLR calculation has reduced consumer access to agents and brokers, leading to "a detrimental effect on essential services provided" such as guidance in claims processing and tailoring health plans to fit the needs of individuals and businesses.
