Representative Latta cosponsors bill to ensure future access to agents
By Karen Irwin
On March 17, Representative Bob Latta (R-OH) pledged his support of a bill that promises to save thousands of jobs and make it easier for Americans to secure high-quality, affordable health insurance coverage.
With the support of lawmakers like Representative Latta, the Access to Professional Health Insurance Advisors Act of 2015 (H.R. 815) would modify the way that the federal health reform law calculates health insurers’ administrative costs by excluding agents’ commissions.
Without this necessary change, hundreds of insurance agents would be put out of work – and everyone in our community would find it more difficult to obtain the right coverage that meets their family needs.
The federal health reform law dictates that insurers devote at least 80 percent of premium dollars to medical claims in the individual and small-group markets — and 85 percent in the large-group market. Firms that don’t reach these “medical-loss ratio” (MLR) thresholds must rebate consumers the difference.
The idea is to limit potentially wasteful spending on overhead and ensure that consumers get good value for their premium dollars. Unfortunately, the critically important services provided to health insurance consumers by agents and brokers have been devalued in the federal government’s attempt to reduce insurers’ administrative costs.
Agents are licensed and independent, working for the client during initial sale and policy renewals. They provide year-round advice and assistance to their clients as well, whether it is an employer group or an individual consumer. Commissions are the fees earned by agents and paid by policyholders for the valuable services rendered in servicing the policy holders’ needs. Insurance carriers simply serve as pass-through conduits for commission fees. For this reason, such commissions should not be included in the insurance carriers’ medical-loss ratio.
The misclassification of commissions has had a swift — and disastrous — consequence. Many insurers immediately slashed spending on commissions when the MLR rules took effect last year. The U.S. Government Accountability Office found that agent commissions have fallen by as much as 50 percent since the passage of the federal health reform law.
The MLR has made it impossible for agents to stay in business. Consequently, the exodus is already beginning. A recent study by the Bureau of Labor Statistics found that the number of health insurance agents and brokers decreased by 3.3 percent nationally within the first few months of the enactment of the new MLR rules.
That’s bad news not just for the employment situation — but for families and small businesses, as well. People depend on agents to help them understand the insurance marketplace. As the numerous provisions of the health reform law take root, it will only grow more confusing. Individuals and small employers depend on their agent to assist them with their health insurance questions.
Fewer agents will mean reduced choices for the heath insurance buyer and less help for Americans making vitally important healthcare decisions.
By supporting H.R. 815, Representative Latta showed he understands the skills and knowledge agents possess are more essential to our community than ever. Excluding commissions from the medical loss ratio will ensure that agents continue providing the vital service on which families and small business rely.