News Alert: Policymakers, Commentators and Government Relations Reps Speak to Agent Commissions and Federal Health Care Reforms

Earlier today, the National Council of State Legislators (See NCOIL agenda attached) kicked off its spring meeting here in DC with both a panel and a keynote address on federal health care reform. The topics and discussion — outlined below — included exchange and federal medical loss ratio issues directly impacting agents and brokers.

Steve Larsen Keynote Address:

· Key federal regulator Steve Larsen was the featured luncheon keynote speaker. The former Maryland commissioner and now Director of the Center for Consumer Information & Insurance Oversight at the Department of Health and Human Services (HHS) was asked about the agent commission issue. He said that his office has “been spending a lot of time thinking about the agent and broker community.” He added that HHS is looking for ways to “support the role of the agents and brokers both today and in the exchange world after 2014.”

· Larsen went on to emphasize that HHS “has been very supportive of the very thorough process and the final MLR recommendations adopted by the NAIC.” He noted that HHS has “adopted those recommendations with very few exceptions.” He added, however, that he recognized concerns about how agents and brokers would fit into the new marketplace, and stressed that “we’ve adopted provisions outside the [federal reform] statute that are designed to provide some relief to agents and brokers.” By way of example, Larsen pointed to one of the regulatory criteria HHS has established in considering MLR waivers, namely, “whether the new MLR standards will affect the ability of consumers [in a particular market] to access agents and brokers.” He concluded by saying that HHS continues to engage in a “dialog” with the producers, having met with this community – including representatives from Florida — within the last two weeks to “see what else we can do to support the role of agents and brokers.”

· He added that he expects HHS to issue more detailed exchange rules for public comment in “late spring or early summer.”

Morning Healthcare Panel:

2010 HEALTH ACT: WHAT’S GOOD? WHAT’S BAD? WHAT MEANING FOR STATES?

10:15 a.m. – 11:45 a.m.

Moderator: Sen. Jake Corman, PA

Wes Bissett, Senior Vice President of Government Affairs, Independent Insurance Agents

& Brokers of America (IIABA), Alexandria, VA

Sabrina Corlette, Research Professor, Georgetown University Health Policy Institute,

Washington, DC

Ed Haislmaier, Senior Health Fellow, The Heritage Foundation, Washington, DC

Sandy Praeger, Kansas Insurance Commissioner, on behalf of the National Association

of Insurance Commissioners (NAIC), Topeka, KS

Mark Pratt, Senior Vice President of State Affairs, America’s Health Insurance Plans

(AHIP), Washington, DC

· Haislmaier said that it would be critical for states to structure their regulatory regime and their markets going forward so as to keep “the incompetent and meddling federal government out of the way.” He added that one of the ways to do this is to “vest your [state] insurance departments with the authority to carry out the law and don’t give this authority to the exchange,” by duplicating the state licensing system within the latter. He added that with respect to Medicaid, states need to “protect themselves” because “whoever controls the exchange controls access to Medicaid and the federal [exchange-based] subsidies…If the feds have the keys you’ll be selected against; if you have the keys the feds will be selected against.”

· Praeger ticked off a number of complex exchange issues, including the fact that if the exchange “navigators steered consumers to particular products, they would likely need to be licensed’ as agents or brokers. Regarding commissions, she said that there were “multi-year [agent commission] contracts in place before the [reform] law passed.” She added that “we think agents and brokers play a valuable role in selling and servicing the products. Without the agents, we’d have to increase the number of consumer representatives within our [state] regulatory agencies” to address consumer issues and complaints.

· Praeger asked rhetorically, “Is there much room [for regulatory relief] on MLR?,” and responded with, “There doesn’t appear to be a lot.” She then said that folks could “go to Congress and ask for an amendment to the law…That’s the easiest solution. Absent that, we continue to look to find ways for this to work out for the benefit of consumers.” She ended by saying that “presumably [exchanges] will make some of these [purchasing] decisions easier.”

· Corlette said that she thought the 80% and 85% MLR’s were “reasonable,” and that there was “no excuse for not meeting them.” She added that there would be “less of a need after 2014 for agents and brokers” to assist with underwriting barriers, etc., because the reform law would eliminate these issues. She concluded by saying that if agents and brokers got relief from the MLR requirements through an exemption for commissions or otherwise, it would “not be a “win/win, but a win/lose,” with consumers ending up the losers. Later, however, she described the MLR standards as “a blunt instrument” and a “political device” as a “sop to those [in Congress] who wanted a public option.”

· Bissett described the MLR waiver process as “cumbersome,” and stressed that they were “only good for three years” in any event. He opined that “HHS has authority to make changes” in the MLR requirements because the reform law is “vague.”

· Haislmaier responded that the treatment of agents and brokers in this regard is “one thing here [in the reform law] that is not all that bad.” He explained that he supported a consumer-friendly range of choices, based on a set of “defined contribution options.” He said that we should “want trained experts to work for the buyer,” and that would also mean that “licensed agents would be compensated by the buyer.”

Kevin Wrege

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016

NCOIL Spring Tentative General Schedule 2.21.11.pdf

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