U.S. Reps John Barrow (D-Savannah) and Mike Rogers (R-Michigan) have introduced a bipartisan bill that would amend the new health care law to preserve consumer access to licensed insurance agents and brokers.
“Insurance agents and brokers serve as the voice of health insurance for millions of families and small businesses in rural communities,” said Barrow. “These folks can help explain to consumers the many changes taking place in the health care world over the next few years, and so it’s important that our insurance agents are not hampered by provisions in the new health care law.
“The nation’s 500,000 insurance agents and brokers help consumers find the right health care, advocate on their behalf, identify cost-savings opportunities and inform them of new products and changes in the industry,” said Rogers. “A mandate in the new health care law severely restricts their ability to perform such services, meaning small businesses are losing jobs or shutting down completely and consumers are finding it harder to access their services.”
State consumer protection and tax laws require that insurance agents and brokers be paid through commissions included as part of consumers’ regular insurance premiums. The new health care law now classifies commissions as an “administration expense.” By itself, this reclassification would not pose a problem, except that a new regulation in the law — called The Medical Loss Ratio — mandates that insurers may only spend 20 percent of insurance premiums on administrative expenses. The result has been insurers dramatically cutting commissions to agents in order to comply with the Medical Loss Ratio mandate.