Or maybe the title ought to be Waivers for Nothing And Your Chicks For Free.
Today’s NJ has a spectacular bit of reporting on the effort by the Insurance Commissioner to request waivers for two insurance firms in Delaware. The waiver is a request to allow companies that can’t get to the 80% rule (80% of all premiums have to be spent on medical care) required by the ACA some additional time to get to that requirement, but still offer their insurance products in the state.
Think about that for just a second. The waiver is being requested to specifically get around one of the key cost control features of the ACA — meant to ensure that more of your premium dollar is spent on your medical care and NOT on administration or overhead. Interestingly, these waivers don’t seem to be in the pipeline because these companies have issues getting to the 80%, but because insurance brokers are seeing their commissions cut:
In response to the new federal rule, health insurers in Delaware have slashed brokers’ commissions by as much as 80 percent to reduce overhead costs, according to brokers and the insurance office.
Stewart’s waiver request came after a lobbying effort on behalf of the thousands of insurance brokers operating across the state. Brokers said they need a waiver to boost commissions and retain agents, who are fleeing the business. Efforts to exclude commissions from administrative cost calculations have been launched nationally, but have been unsuccessful.
On top of this, it looks like the ICs office has just gone off to request these waivers pre-emptively — without a stated threat from these companies to leave the marketplace. We don’t know if they would, but we do know that the state’s insurance brokers are looking to the ICs office to save their bacon. It isn’t clear to me, though, that even if these companies get their waivers that they would increase their commissions to brokers. I would expect that these big companies will hang on to whatever funds they can — because the waivers don’t last forever. But what is true is that the request for this waiver doesn’t have anything to do with consumers — who would be out either their rebate checks OR more of their premiums available to pay for their health care.
One thing to keep in mind as you watch insurance companies accommodate the requirements of the ACA is that they *have* to change the way they do business, meaning that there are likely insurance related jobs that will go away. That’s too bad, but then, some part of the reason why your premiums are so high is due to the overhead these firms carry. Changing how they do business is one of the ways to get you better value for your premium dollar.
Better value for your premium dollar ought to be the business of the IC’s office — not whether or or not commissions are high enough for brokers. One of the people in Jonathan Starkey’s article sent off a letter to the HHS asking that they deny the request. You should too.