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MLR Bill Passes House Committee

Margaret Dick Tocknell, for HealthLeaders Media, September 21, 2012

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.

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1 comments on "MLR Bill Passes House Committee"


J Green (9/21/2012 at 2:22 PM)
Excluding agent and broker fees is categorically absurd. DO they provide healthcare?