NAIFA GovWatch

NAIFA, Industry Representatives Meet with HHS to Discuss Health Care Exchanges, MLRs

Issue: Health Care Reform

Date: February 22, 2011

Action Taken: NAIFA—along with a large assembly of industry partners including NAHU and AHIP—met with Department of Health and Human Services officials on February 18th to discuss the implementation of the PPACA. Also present at the meeting were representatives from the NAIC, as well as several consumer advocacy groups. After preliminary remarks from HHS Secretary Kathleen Sebelius, the meeting began with a primary focus on health care exchanges and medical loss ratios.

Health Care Exchanges: HHS officials agreed with producer recommendations that States should set up their own Exchanges and that agents should be allowed to participate inside and outside of the exchange. They also agreed that a level playing field is needed both inside and outside of exchanges, and that this must be done on a state-by-state level. HHS is cautious about the idea of regional exchanges, as well as merging individual and small group markets. Both the NAIC and producer groups agreed the states should decide the role of the agent in the exchanges.

Licensing of Navigators was a dividing point. Agent groups and the NAIC stated our belief that anyone enrolling should be licensed. Consumer groups did not agree with this statement. HHS representatives seemed to agree that enrollment into private plans should be performed by a licensed individual, but the consumer groups would not agree and there was no commitment to support license requirement for enrollment. Several state insurance commissioners on the call expressed a firm commitment to agents and agreed that Navigators should be licensed if enrolling consumers.

Medical Loss Ratios: Industry groups continued to ask for the agents’ commissions to be excluded from the medical loss ratio (MLR) calculation or for HHS to freeze, delay or phase-in the regulations until there can be further study of the impact on agents and producers. NAIFA and our partners explained that the agents’ commissions could be taken out of the calculation, still considered premium (thus subject to the premium tax paid by the carriers) but not considered “earned premium” (a term used in the language of the PPACA) as the agents’ commissions aren’t earned by the carriers. They are paid as a part of the premium but immediately passed on to the agents.

Consumer group representatives continue to be opposed to any adjustment to the MLR as laid out in the PPACA.

The NAIC was very supportive and is trying to get their arms around what is permissible in the various states. One of the big state concerns is the fact that they receive premium tax revenue on the commissions and don’t want to lose taxes by reclassifying the payments made to agents. There were a number of state insurance commissioners on the phone and they were all supportive of the agents’ role.

HHS/The Center for Consumer Information and Insurance Oversight (CCIIO) seemed to recognize/appreciate the concerns presented by the producer groups, but believe they are constrained by the law. They indicated they would welcome additional information from the NAIC.

Next Steps: HHS representatives indicated that this would be the first in a series of meetings to discuss these and other topics related to the implementation of the PPACA. NAIFA remains committed to ensuring consumers have access to licensed, fairly-compensated agents and we are eager to continue our conversation with HHS and lawmakers.

NAIFA Staff Contact: Diane Boyle, Vice President - Federal Government Relations

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