|Copyright:||(c) 2011 A.M. Best Company, Inc.|
|Source:||A.M. Best Company, Inc.|
The MLR requirement mandates that 80% of revenues generated by individual and small group premiums go to covering the cost of medical care. The figure goes up to 85% for large group premiums.
Dworkin said in the year since the ACA passed, his commissions have been reduced by an average of 45% from where they were before the law went into effect.
One policy he sold for an insurer he declined to name generated
“This is the worst I have ever seen in my career. These companies are forcing you to sell twice as much to make the same amount of money because commissions are being cut by more than 50%. And with the high deductibles in many plans, they’re making a killing on premiums,” Dworkin said. “Where is the exposure?”
Dworkin is hardly alone. The list of those who have voiced criticism about the MLR includes regulators, insurers and legislators.
Health insurance producers across the country told BestWeek they have had to significantly alter their business in order to compensate for falling commissions.
According to a survey of members of the
But some agents and brokers in other parts of the country said they have seen little effect on their business.
The mixed impact of the MLR requirement is borne out by data collected by the
However, data provided by 11 states that already had MLR requirement statutes on the books prior to the passage of health reform shows that in some states, producer commissions have been reduced in recent years.
“In 2011, a significant number of companies have reduced commission levels, particularly in the individual market. However, a significant number of companies have not reduced commissions in 2011, at least not yet,” the report said. The report also notes the states with higher MLR requirements have not observed any problems with consumer access to insurance or producers (BestWire,
The data in the report also show that proposed changes to the MLR requirement, such as the one included in a recently introduced federal bill would exempt producer commissions from the MLR calculation, would slash rebates paid to consumers by more than
To date, 12 states have requested exemptions from the MLR requirement, arguing it could cause severe disruptions in the health insurance marketplace.
Some insurers have cited the requirement as part of the reason for frequent rate increase requests.
In a letter submitted to the
That argument isn’t finding much traction with some regulators who argue that insurers have used the MLR requirement as an excuse to slash commissions while they can.
California Insurance Commissioner
“I don’t think the medical loss ratios are the drivers here. I think we have just had a consistent trend in
And with the coming implementation of health insurance exchanges in 2014, Dworkin said he doesn’t expect to see any real improvement in his business for quite some time.
“The next three years will be the end of my business as I know it,” Dworkin said. “The saddest thing is going to be the effect on young agents and brokers. If they don’t have a parent or someone who is willing to pass their business along, there’s not going to be much of a business for them to go out and get.”
To hear the interview with California Insurance Commissioner