Big ‘I’ Pushes Administration on Medical Loss Ratio

The Big “I” continues to fight the federal Medical Loss Ratio (MLR) created by the Affordable Care Act (ACA).

Earlier this week, the Big “I” responded to a request for information from the U.S. Department of Health and Human Services (HHS) that asked for ideas on how to reduce some of the regulatory burden created by the ACA. The Big “I” focused its comments on amending the MLR.

Beginning in 2011, the ACA required insurance companies in the individual and small group markets to spend at least 80% of premium dollars on non-administrative expenses. Insurance companies in the large group market must spend at least 85% of premium dollars on non-administrative activities.

The purpose of the MLR is to limit the amount insurers spend on administrative expenses in order to increase consumer value for their health care dollars. However, the rules HHS put in place to implement the MLR inappropriately classify agent and broker commissions as an administrative expense. This has caused insurers to significantly reduce and eliminate commissions for agents and brokers who sell health insurance in the individual and small group markets.

As such, in its letter, the Big “I” urged HHS to reconsider the rules that regulate the MLR in order to eliminate agent and broker commissions from the MLR and treat them appropriately. The Big “I” will continue working with HHS and Congress on issues related to the MLR.

Jennifer Webb is Big “I” federal government affairs counsel.