Brokers

Last Thursday, the U.S. House of Representatives Small Business Subcommittee on Investigations, Oversight and Regulations held a hearing on the issue of the Medical Loss Ratio (MLR) in Washington, D.C. Titled “New Medical Loss Ratios: Increasing Health Care Value or Just Eliminating Jobs?,” the hearing was a forum for views on how the MLRs mandated by the Patient Protection and Affordable Care Act (PPACA) could impact the health care insurance industry. Most individuals testifying expressed concerns about how the MLR formula as currently structured could greatly hinder the ability of brokers and agents to support consumers and business owners when purchasing health insurance.

The Department of Health and Human Services (HHS) just released its final Medical Loss Ratio rule, and the outcome does not bode well for the broker/agent community. In the ruling HHS has rejected the NAIC recommendation to exclude broker/agent fees from insurance companies’ allowed administrative costs.

Under the rule beginning this year, individual and small group market insurance plans will be required to spend 80% of the premiums on medical care and health care improvement. Only the remaining 20% will be allowed towards administrative costs. Much the same, large group plans will have an 85% of premium requirement.

One of the more positive aspects of the Patient Protection and Affordable Care Act (PPACA) was the authorization of a federal tax credit for small business owners who offer health insurance benefits to their employees. This tax credit potentially is worth a great deal of money to small business employers. Despite the potential for significant cost savings, efforts to promote the Small Business Health Care Tax Credit to small businesses have missed the mark.

In a keynote address delivered at the American Health Insurance Plan’s (AHIP) annual Medicare Conference on September 12, Donald M. Berwick, MD, administrator for the Centers for Medicare & Medicaid Services (CMS), addressed a number of issues associated with the long-term financial health of the Medicare Program.[1]

His 45-minute speech centered on the need to address the rising costs required to fund the federal program supporting American seniors and a few special populations. In a humorous moment, Dr. Berwick noted that he just celebrated a big birthday last week and is now eligible to become a Medicare beneficiary himself, which has added some urgency to the matter.    

Last month, the NAIC published a brief video to help answer questions posed by consumers regarding the Patient Protection and Affordable Care Act (PPACA).[1] Brokers and agents may want to use this video as a reference tool for their clients.  Subjects covered by the video include:

• Individual and employer mandates
• Pre-existing conditions
• Healthcare exchanges
• Preventive care measures
• Medicare. [2]

Click HERE to view the video.