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MLR May Sting, but HIEs Could KO Health Insurance Brokers

Jeff Elliott, for HealthLeaders Media, March 23, 2011

While it can be debated whether or not agents and brokers are suffering as a direct result of the law or from the cumulative effect of several years of rising healthcare costs, it's clear that MLR rules are reshaping the health insurance industry with many companies abandoning personal insurance lines and reducing the amount they spend on other areas such as fraud prevention and claims management—two areas that insurers had lobbied to be included in the MLR rules.

But a change to MLR rules for agents and brokers isn't a slam dunk. It has some high-powered detractors, including Sen. Jay Rockefeller (D-WV) who insisted in a letter to the National Association of Insurance Commissioners that exempting this group from the rules is essentially a $1 billion windfall that should be funneled to consumers. Rockefeller is strategically lobbying NAIC—whose members include the 50 state commissioners—because individual states are taking up the issue with legislation that would offer protections for brokers and agents.

Regardless of what happens with MLR regulations, it might not deal the final blow for producers. That may come in the form of the health insurance exchanges that could effectively eliminate the need for agents and brokers.

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3 comments on "MLR May Sting, but HIEs Could KO Health Insurance Brokers"


Bob McNett (4/1/2011 at 3:11 PM)
Obviously the "so be it" commentator is not a small business owner or someone hard-pressed to find insurance as an individual. I know that all our customers, mostly small-to-medium sized businesses and some individuals, appreciate our services. They hire us for the same reason they hire an attorney, CPA or other professional. We help them navigate the system when [INVALID]ing a group or individual health plan, and, more importantly, assist with claims problems, billing questions and other service needs throughout the year. Any critics of how brokers are paid that I have heard do not include business owners or people buying insurance on their own. The critics are those who get their coverage thru a large company or perhaps a government worker, that have never been in a position to use the services of a health insurance broker, and therefore have no idea what they are talking about.

Bill Hammett (3/24/2011 at 12:19 PM)
Agents and brokers provide an invaluable service to the consumers. We help navigate through hundreds of options, spreadsheet the very best alternatives to the current offering, help employees, individual and seniors enroll in plans. When there is an issue with a claim denial, lost ID card or trying to find a provider...the agent/broker community is the one that fixes it. With a diminished agent/broker population the end user would have to work directly with the insurance company to solve these problems...neither of these parties are set up or equipped to handle these issues...because of this productivity will be lost by the employee or individual and administrative costs will soar at the insurance company level. This will ultimately increase costs. So, you see, insurance agents and brokers help make the system more efficient and thus keep costs down. This is why commissions for our population should not be counted in MLR.

ET (3/23/2011 at 1:25 PM)
Premium dollars paid to agents and brokers contribute nothing to medical care or quality improvement. Whether premium dollars are retained by the insurer, or paid out to agents and brokers as commissions, they are dollars that do NOT go toward medical care or quality improvement. Clearly these are administrative expenses. If the agent/broker market segment suffers as a result, well, in the words of the esteemed Speaker of the House, "So be it."