Agents Still Not Liking MLR Requirements

From Capitol Hill testimony:

The cost and quality of healthcare will get worse because of healthcare reform rules that let the federal government review rates and set limits on how insurance companies spend their money, small businesses and insurance agents said Thursday.

Employers and agents are particularly concerned about rules that say insurers can only put 20 percent of their revenues toward profit and administrative expenses. Agents and brokers want their commissions to be carved out of the definition of administrative costs. Without that change, they fear insurers will squeeze broker commissions in order to free up money for other uses.

Agents and brokers are facing a “desperate economic situation” because of the requirements, said Janet Trautwein, chief executive of the National Association of Health Underwriters. She testified Thursday before the House Energy and Commerce Health Subcommittee.

Witnesses said the restrictions on spending — known as the medical loss ratio — will ultimately raise costs and reduce options for consumers. The MLR represents a “significant move toward government micromanagement of health insurance,” University of Pennsylvania professor Scott Harrington said.