Final Medical Loss Ratio Rule Rebuffs Insurance Agents

[ProSense]

Source: Kaiser Health News

The Obama administration issued a rule today that is sure to disappoint insurance agents: Fees paid to brokers and agents won’t count as medical care, under limits imposed on insurers in the 2010 federal health law.

That’s key because under the health law, insurers must spend at least 80 percent of their premium revenue on medical care and quality improvement – or issue rebates to consumers. The target is 85 percent for large-group issuers.

Brokers had lobbied hard to have their fees exempted from the calculation of administrative costs, which also includes such expenses as marketing and executive salaries, saying that without such a move, commissions will be cut and agents could lose their jobs, leaving consumers without as much access to brokers who help them choose health insurance.

But consumer advocates fought the move, saying commissions are clearly administrative costs and removing them would make it easier for insurers to avoid paying the required rebates to consumers. Those rebates will go out next year to individuals and small-business policyholders whose insurers fail to hit spending targets this year. The rebates could come in the form of reduced premiums.


Read more: http://capsules.kaiserhealthnews.org/index.php/2011/12/final-medical-loss-ratio-rule-rebuffs-insurance-agents/