To the Editor:
Seven consumer representatives to the National Association of Insurance Commissioners (NAIC) appear to have chosen to campaign against the involvement of licensed independent insurance agents and brokers in the health insurance exchanges, as mandated under the Patient Protection and Affordable Care Act (PPACA). Why else would they be opposing efforts to ensure that they are fairly compensated?
In a guest opinion article in Kaiser Health News, these consumer activists characterize compensation to licensed agents and brokers as "unnecessary administrative expenses" and that excluding their fees from the calculation of medical loss ratios (MLR) would "dilute the law’s efforts … to empower consumers to make informed decisions when choosing a health plan."
In fact, the opposite is true. Encouraging the de facto removal of licensed agents and brokers from the process by severely restricting their compensation dilutes the ability of consumers to have access to the kind of expert professional advice and counsel they need.
Choosing a health insurance plan is serious business. It is a complex process that cannot be compared to purchasing a book from a website. Insurance is not a commodity. The implications of making a poor choice due to lack of adequate knowledge include paying too much or getting inadequate coverage, and you may not be aware of the consequences of a bad decision until it’s too late. When it comes to health insurance, making an ill-informed decision can end up costing you your business, your life’s savings – or your life.
Many consumers who would be most negatively affected by the loss of licensed, trained health insurance agents are the poor, the elderly and small business owners who don’t fully understand all the options available to them. Declaring that licensed insurance professionals are unnecessary to the process of choosing a health plan is telling consumers to fend for themselves. It is anti-consumer.
It was state insurance authorities and lawmakers, at the urging of consumer advocates, who created the requirement that anyone who provides insurance services to consumers must be duly licensed by the state. This requirement establishes that each state has authority over insurance producers, and that these producers must comply with market conduct and practice requirements under insurance law. In addition, insurance producers must comply with continuing education requirements as a condition of licensing.
Congress already recognized the value of licensed agents and brokers when it specifically included them as an integral part of the health care delivery system under PPACA. Utilizing the rule-making process in an attempt to effectively negate this provision of the health reform law is counter-productive and could undermine the chances for success of health care reform.
The NAIC stated unequivocally in a resolution passed in August 2010 that licensed agents and brokers are "indispensable" in the evolving health insurance market. The resolution noted, "It is essential that producers continue to perform these duties, and others, as the Affordable Care Act has made significant changes to the regulatory environment for health plans. To understand these changes, employers and consumers will need professional guidance even more in the future." A similar resolution was passed unanimously by the National Conference of Insurance Legislators (NCOIL).
If licensed, trained professional agents are forced to leave the market, who will provide competent advice on proper insurance coverage to consumers? Who will field the millions of calls from consumers and answer their questions? Without agents, legislators and regulators will get those calls at their offices.
During an NAIC panel discussion on May 3, 2011, Joel Ario, former Pennsylvania insurance commissioner and director of the newly-created Office of Insurance Exchanges at to the Department of Health and Human Services (HHS), said agents "will be vital to exchanges and should be part of [the] leadership [of the exchanges]." Ario also noted that, appropriately, the unlicensed "navigators" created under PPACA will be merely "consumer assistants."
The NAIC’s Task Force on Professional Health Insurance Advisors should not abandon consumers by making it difficult for them to utilize licensed agents and brokers to advise, counsel and advocate for them as they make critical health insurance decisions. In order to ensure that this vital consumer protection is preserved, we urge the task force to recommend to HHS that agent and broker compensation be excluded from the MLR when HHS issues its final regulations.
We also urge the task force to endorse the Access to Professional Health Insurance Advisors Act of 2011 (H.R. 1206). This bill clarifies that producer compensation will not be considered as part of the medical loss ratio (MLR), thus reaffirming Congress’ previously stated intent in PPACA, resolving this matter once and for all and freeing HHS to concentrate on the important task at hand: ensuring that the exchanges are successful and that consumers who use them can protect themselves.
As we move into a new era of health care delivery, America’s licensed professional independent insurance agents and brokers stand ready to continue to be full and enthusiastic participants in our health care delivery system for the benefit of consumers.
Senior Vice President, Communications
National Association of Professional Insurance Agents
400 N. Washington St.
Alexandria, VA 22314-2353