The health insurance industry is urging lawmakers to amend the Affordable Care Act's medical-loss ratio provision, The Fiscal Times reported. It wants payments to brokers and agents excluded from administrative costs, claiming their inclusion in MLR calculations hurts insurers' bottom lines and will drive up premiums.
Removing broker commissions would make it easier for insurers to meet MLR requirements and save them money; however, it also would slash rebates given to consumers.
"The unintended consequences of imposing an arbitrary federal cap on health plan administrative costs are likely to outweigh any benefit these rebates will provide to consumers," Clare Krusing, communications director for America's Health Insurance Plans, told the Fiscal Times.
The Fiscal Times pointed to a recent report from the Government Accountability Office, which found that excluding the payments to brokers and agents from the MLR would have sent rebates plummeting from $1.1 billion to $272 million in 2011 and from $520 million to $135 million in 2012.
In addition to lower rebates, a Congressional Budget Office analysis said amending the MLR provision to prevent insurers from counting agent fees as administrative fees would cost the federal government roughly $1 billion between 2013 and 2022. And it would increase the budget deficit by about $531 million between 2013 and 2017.
The new GAO report also showed that, even with agent and broker fees included, more than 75 percent of insurers met or exceeded medical-loss ratio standards in 2011 and in 2012.
Despite issues with the current medical-loss ratio formula, the GAO found MRL rules barely influenced insurer spending, according to a Covering Health blog post from the Association of Health Care Journalists. When the GAO interviewed eight insurers, they all said MLR requirements did not affect or minimally affected how much they spent on quality improvement efforts, as FierceHealthPayer previously reported.
"The more interesting question is how this shakes the industry out. Are there enough insurers making enough money to stay in the business, or are a few large ones making all the money?" MIT economics professor and ACA architect Jonathan Gruber told Covering Health.