An unexpected win for consumers at NAIC
There’s been lots of drama at this year’s first meeting of the NAIC (National Association of Insurance Commissioners) in Austin, TX – way more than any of us consumer representatives to the NAIC expected. The good news, as you may have heard by now, is that the NAIC decided to delay a vote to endorse Congressional legislation that would remove broker commissions from the Medical Loss Ratio (MLR). But that outcome seemed like a pipe dream when the NAIC’s consumer representatives first landed in Austin on Thursday night.
Consumer reps had all been told for weeks that nothing was going to happen at this meeting, no votes would be taken, there’d be just a few hearings – that’s all. So when we got word just the day before we arrived that a number of Commissioners were pushing hard to endorse the Rogers bill we were all taken off guard. Even more alarming, we heard from a number of sources that support for the brokers’ position was so strong the vote was almost a “done deal.”
But after intense advocacy by all sides, including from many consumer groups all around the country, the NAIC decided to take another look at the proposal. After all, not only is it likely that the Rogers bill would result in premium increases for consumers, but there’s simply no evidence that consumers or small businesses are suffering from a lack of access to brokers, or whether reductions in broker commissions are actually a result of the MLR. The only state to provide before and after data on MLRs – Colorado – showed that broker commissions were cut from 20 percent to 10 percent of the premium, suggesting they were way above market norms to begin with.
The NAIC’s health committee will now take a few weeks to actually analyze data in the market about broker commissions and the impacts on consumers and small business owners. We think this is the right approach, and applaud NAIC for taking a more thoughtful and deliberative approach.
Addressing broker compensation is not the only thing NAIC was up to this weekend. The meeting kicked off on Friday with a hearing on health insurance Exchanges. The Exchange Working Group heard testimony from Medicaid experts about some of the very challenging issues states are facing to effectively coordinate public programs with the commercial insurance markets, and got demonstrations of Utah and Massachusetts’ web-based health plan finders. Both states have clearly put a lot of work into designing a web interface that is consumer friendly. That said, by emphasizing how easy their process is for employees, Utah’s presentation was slightly misleading. They neglected to mention that enrollees need to undergo health status underwriting before they can access the website, and they glossed over the difficulty many employees have in choosing a plan among more than 100 different product options.
Joel Ario, head of the Exchange division at HHS’ Center for Consumer Information and Insurance Oversight (CCIIO) also testified. He was asked a number of questions about the feds’ plans if a state doesn’t set up its own Exchange. Ario indicated that HHS has been working on a federal fallback plan, but that HHS does not intend to produce a one-size fits all model. And even if they do have to set up a federal Exchange, HHS would have every intention of working with the states to tailor the Exchange to states’ markets and ensure coordination with state-run public programs such as Medicaid and CHIP.
Next up for the Exchange group is to finalize white papers on issues like financing, adverse selection, and Navigators, as well as to issue additional draft white papers on governance and active purchasing. NAIC consumer reps have submitted extensive comments, and will continue to try to shape NAIC’s recommendations on these issues.
Last but not least, NAIC is looking ahead to 2014 and has a task force working to develop a model state law to implement reforms like elimination of pre-existing condition exclusions, the new premium rating rules, and guaranteed issue. They hope to have a model law adopted by the end of this year, which is pretty darn ambitious.
As for the proposed broker bill, we have a short four to six week reprieve before NAIC takes it up again – and consumer advocates will need to continue to make sure their voices are heard during this process.
— Sabrina Corlette, Research Professor at the Health Policy Institute Georgetown University