A bill that would amend two important medical loss ratio provisions of the Patient Protection and Affordable Care Act was passed by a House committee Thursday.
HR 1206 (Access to Professional Health Insurance Advisors Act of 2011) is best known as an effort to amend the MLR rule to exclude broker and agent fees and commissions from administrative expense calculations. However, the bill would also give states the final say on MLR waiver requests. That authority now rests with the Centers for Medicare & Medicaid Services.
The 24-14 vote by the House Energy and Commerce Committee clears the way for a potential full House vote.
The MLR is one of the most contentious provisions of the PPACA. It was conceived to force health insurers to spend more of their premium dollars on medical care and health quality improvements.
Insurers are required to spend no more than 20% of premium payments collected for the individual and small group market on administrative expenses such as salaries, overhead, and markets. The remainder, up to 80% of premium dollars, must be spent on direct patient care. Insurers that fail to meet that standard are required to make financial rebates to their members.
A waiver process permits individual states to apply for an MLR exception on behalf of insurers in their state.
PPACA includes an extensive list of items that can be counted under medical care for the MLR, such as case management, information technology, quality initiatives, and even certain taxes, but agent and broker fees remain an administrative expense for MLR calculations.
Citing job losses and lost income, agent and broker lobbying groups have fought to exclude those fees and commissions from MLR administrative expenses.
While Republicans and several Democrats embraced the cause, Jonathan Gruber, an MIT economist and an adviser to President Obama on the PPACA, challenged the exclusion in an e-mail exchange with HealthLeaders Media.
"It makes no sense to exclude broker and agent fees from the MLR. The entire idea of MLR regulation is to ensure that insurers are focusing their efforts on protecting us from risk, and not engaging in other activities around marketing and profit-taking."
Gruber suggested a more transparent approach: "Brokers should be priced separately when we purchase insurance, just as tax advisors are when we fill out our taxes. Then individuals who value those services can take advantage of the brokers, while those who do not will pass on their services."
HR 1206 would also require CMS to defer to state insurance commissioners regarding requests for MLR waivers. In his comments in support of the bill, Rep. Fred Upton (R-MI), who chairs the committee, noted that Michigan's request for a waiver was denied, despite the contention by state officials the MLR could destabilize the state's individual health insurance market.
"Michigan, not Washington, should make this decision," Upton stated.
While the committee vote clears the way for full House of Representatives consideration, HR 1206 still faces an uncertain future in this election year. Both the House and Senate are expected to recess in the next couple of days until after the November election.
There is a slim chance of a vote in the lame duck session if the bill is attached to a bigger package, but it's most likely dead until next year, explains Avram Goldstein, communications and research director for Health Care for America Now, a consumer advocacy group that opposes the bill.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
