Big ‘I’ Pushes Back on Commission Cuts

A troubling trend has emerged in the health insurance marketplace: Insurers in several states have reduced agent and broker commissions for individual health insurance plans.

In many cases, insurers have eliminated commissions for all individual plans. In other cases, insurers suspended commissions for certain metal categories, such as gold plans, and lowered them for others, such as bronze plans.

To fight these actions, the Big “I” recently sent a letter to Kevin Counihan, U.S. Department of Health and Human Services (HHS) director and marketplace CEO, expressing the association’s concerns.

In the letter, the Big “I” makes it clear that the association believes this practice will negatively impact consumers and create instability in the marketplace. The Big “I” also makes the case that it is within the authority of the Centers for Medicare and Medicaid Services—the department within the HHS that oversees the Affordable Care Act—to help address these issues. The letter argues that, if an insurer provides agents and brokers with one commission rate during open enrollment and then reduces rates for the remainder of the plan year, an individual’s access to coverage and all channels of consumer assistance will diminish.

The Big “I” also believes this reduction of agent and broker commissions stems in part from implementation of the medical loss ratio (MLR), which limits the amount of money insurance companies can spend on “administrative costs.” Unfortunately, the MLR includes agent and broker commissions as part of those costs.

In addition to expressing the association’s concerns regarding the MLR to the HHS, the Big “I” continues to advocate on Capitol Hill for two pieces of legislation that would exclude agent commissions from the MLR. In the U.S. Senate, the Big “I” supports S. 1661, the “Access to Independent Health Insurance Advisors Act,” by Sens. Johnny Isakson (R-Georgia) and Chris Coons (D-Delaware). In the U.S. House of Representatives, the Big “I” supports H.R. 815, the “Access to Professional Health Insurance Advisors Act of 2015,” by Reps. Billy Long (R-Missouri) and Kurt Schrader (D-Oregon). Both pieces of legislation will be topics of discussion at the Big “I” Legislative Conference in April.

Wyatt Stewart is Big “I” senior director of federal government affairs.