Back in June, we discussed the actions of KWS to apply for waivers from the medical cost ratio rule for two insurance companies so that they can continue to pay commissions to brokers and sales agents. Since then, HHS has finalized its rule that requires that the costs to pay premiums or other support to brokers and sales agents be categorized as Administrative Costs and therefore included to the maximum 20% overhead allowed by the ACA. Delaware’s own Insurance Commissioner voted in a recent NAIC action to vote on a resolution that recommends that Congress exempt the fees insurance agents and brokers from medical loss ratio calculations (pdf) and that HHS revive their rulemaking to exclude brokers and agents from the the administrative costs of insurance companies.
This is still a remarkable position. Especially since one of the major points of the ACA is to rein in some of the excesses of insurance companies and get them to spend more of your premium dollar on your health care. The ACA is trying to protect consumers with its medical cost ratio provision and KWS is voting to weaken it. Weaken it such that brokers get paid and you get less health care or pay higher premiums. In casting her vote for this, she is reported to have made this argument:
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.
Did you see that? I think that this is te BCBSD merging with Highmark deal (were there other mergers we missed hearings about this year?) and I thought that the IC supported that because BCBSD needed a new computer system. This is the first time I saw that they needed the merger because they couldn’t live with the MLR, besides, I thought I saw someplace that BCBSD was comfortably living within the 80% already. I could be wrong on that.
But what I’m not wrong on is the fact that KWS is completely abandoning the people who pay premiums for the people who get paid to collect them. The vote on the NAIC resolution was close — 26 yes votes, 20 no votes, and 5 abstentions. I’m not sure about how much weight this resolution has with either Congress of the HHS, but the Insurance Commissioners who voted to support this thing should resign their offices immediately — since they clearly don’t know what Consumer Protection is meant to be. It isn’t the job of Insurance Commissioners to help support the slow dismantling of key bits of the ACA, either — and this is one small bite at the apple. Add up enough exclusions and waivers and you’ve changed how this law is supposed to work. These exclusions are not meant to make this law successful, you know. Insurance companies who can’t meet the 80% threshold have to refund the difference to their customers. But the commissions just aren’t that much money — 1-3% of a premium, I understand. This is just about insurance companies trying to get state ICs to help them weaken what they can of the ACA so they can keep as much money for themselves and not spend it on medical services.
I’d ask everyone to call and tell KWS that she needs to stop representing brokers and start representing us, except I’m thinking that she just might write letters supporting MLR waivers to HHS for each of us who called.