Today the National Association of Insurance Commissioners had a plenary phone call to discuss and vote on a resolution that recommends that Congress exempt the fees insurance agents and brokers from “medical loss ratio” calculations. While it was a loss for consumer advocates, the final vote was very close: 26 yes votes, 20 no votes, and 5 abstentions.
Health Access California and other consumer advocates across the nation were watching closely: this resolution, if followed, would weaken a key consumer protection, one that ensures that 80-85% of our premium dollars, at a minimum, go to patient care, rather than administration and profit. This rule has already required some insurers to issue rebates to consumers. Removing broker’s commissions from the calculation allows more money to be spent on these adminstrative and marketing costs, and less money for rebates or for patient care. Elizabeth Abbott, our director of administrative advocacy, and a designated consumer representative at the NAIC, has been working for months on this issue, and argued in previous meetings that the compromise struck last year was fair, and done through a exhaustive and appropriate process.
Susan Voss, President of the NAIC, opened the floor for discussion after going over minor changes, including Wisconsin removing itself as a sponsor of the resolution. There were numerous arguments for and against the resolution, including strong concerns about the process by which the resolution came to this point and the effect on consumers. Commissioners arguing for the resolution included Wayne Goodwin (NC), James Donelon (LA), Roger Sevigny (NH), and Karen Stewart (DE). Commissioners arguing against the resolution include Mike Kreidler (WA), Teresa Miller (OR), Thomas Leonardi (CT), Dave Jones (CA), Robert Easton (proxy for NY), and Mike Rothman (MN). Each of their arguments is summarized below.
Wayne Goodwin, Commissioner from North Carolina, opened the discussion with his reasons for supporting the resolution:
• Mr. Goodwin wants to focus on consumer protection. He fears that the medical loss ratio as it stands will negatively impact services that agents and brokers can provide to consumers. North Carolina requested an MLR waiver for that very reason.
• The NAIC has considered this several times, created a task force to study the issue, and has received plenty of data that seem to lend validity to the complaints and concerns he has heard, so it’s time to act.
Mike Kreidler, Commissioner from Washington, spoke up in opposition to the resolution:
• As the longest-serving Commissioner, he has never seen the NAIC go through a process like this, where a controversial resolution comes forward based on anecdotes rather than fact, and goes to a vote without getting a proper review.
• This resolution won’t help the producers in Washington. If the NAIC really wants to do something to ensure producers aren’t harmed, there should be a mandate to insurance companies that they have to pay a certain amount in commissions and rebates, but no one will propose that. This resolution only helps the insurance companies, not agents, brokers, or consumers.
• Later in the discussion, Mike Kreidler put forward a motion to commit the resolution to a committee or taskforce for further study before a final vote. The motion was seconded by Tom Leonardi from Connecticut. The motion failed with 26 no votes, 24 yes votes, and 2 people abstaining or not voting.
Teresa Miller, the Insurance Administrator from Oregon, also spoke against the resolution:
• The resolution jeopardizes the credibility of the NAIC, which is currently highly regarded. She feels that the NAIC loses objectivity with this resolution, which diminishes the NAIC’s voice and divides the membership.
• The NAIC’s focus should be on how to implement the ACA and protect the insurance-buying public
Thomas Leonardi, Commissioner from Connecticut, added his voice to the opposition to the resolution:
• Saying that this is about opposing agents or brokers misses the point. He is concerned that the resolution is being put forward without a conclusive report from a working group studying it.
• The resolution is very consumer unfriendly and will cost hundreds of millions of dollars.
• The resolution puts HHS on the spot and asks them to do something they’re not empowered to do. This won’t win NAIC any friends on the federal level, and it makes NAIC look very political and partisan.
Dave Jones, Commissioner from California, opposes the resolution for two reasons:
• He has procedural concerns. The resolution hasn’t been heard by any committee. It was first sent to some commissioners secretly. There hasn’t been an open process around this, and there won’t be any opportunity for public comment.
• As for his content concerns, the medical loss ratio is one of the most important provisions of the ACA. The B committee was given very narrow charge that did not include changing the MLR. The committee’s study found that states that had implemented a higher MLR did not see a diminishment in consumer access. Also, where agents and brokers have been taken out of the medical loss ratio, a lot of money that would have been available no longer was.
• No consumer organizations are supporting this resolution, they’re all asking for opposition because of the negative impact on consumer access. Brokers have an important role in the market, but this resolution doesn’t even guarantee they’ll continue to play that role.
Robert Easton, speaking for Superintendent Ben Lawsky of New York, added his opposition to the resolution:
• The resolution is a symbolic gesture that puts HHS on the spot when it’s really up to Congress to act. New York is supportive of the role agents and brokers play; they bring real value to consumers. But at bottom the MLR law benefits consumers by driving down premiums. A change resulting in higher costs for consumers is one that New York can’t support.
Mike Rothman, Commissioner from Minnesota, added his opposition to the resolution and his agreement with the other opposing comments. He added that Minnesota is a good example of how the medical loss ratio works in real time, and it works well there.
James Donelon, Commissioner from Louisiana, spoke up in support of the resolution:
• The ACA specifically names the NAIC as the body to establish uniform definitions relating to the any items that go into the numerator of medical loss ratio calculation, so this resolution is well within the NAIC’s range.
Roger Sevigny, Commissioner from New Hampshire, spoke to counter the claims that the resolution wasn’t heard by a committee. He stated that the resolution was heard by the highest committee – the Executive Committee.
Karen Stewart, Commissioner from Delaware, added her support of the resolution:
• Delaware has to protect their consumers. Since the majority of Delaware residents have private insurance, the medical loss ratio doesn’t really relate to most Delaware consumers.
• Delaware does have a small insurance company that has been at 80 – 88% MLR for years. They are being merged with a larger company because they can’t carry that high an MLR and stay in business.
After the motion to commit the resolution for further study failed, a vote was called on the original resolution. The resolution passed with 26 yes votes, 20 no votes, and 5 abstentions.
Susan Voss, President of the NAIC, concluded with a statement that they will be reviewing the whole issue about process.
We thank our California Insurance Commissioner Dave Jones for speaking out against the resolution and voting against it. The closeness of the votes show that this isn’t over–the NAIC is clearly not speaking in one voice, and so the work continues.
(Thanks to my Health Access colleague Kate Burch for writing up these notes from the NAIC meeting.)