Sunday, November 20, 2011

The ACA vs. Insurance Brokers

The arbitrary restrictions on Medical Loss Ratios (MLR) established by the ACA are having a number of detrimental effects, including destruction of the business of insurance brokers. By serving as experienced and educated advisers, these small businessmen provide a valuable personalized service to purchasers of insurance. Claims that such "administrative activities" of insurance companies are wasteful are quickly debunked when you compare the amount of fraud and waste within Medicare and Medicaid to the the fraud and waste in the private insurance industry.

Analyzing, aggregating and disseminating both information and products are activities which add value and contribute to overall economic efficiency. Putting arbitrary caps on how much a business can spend to make their business function efficiently is just one of many ways that central planners demonstrate their ignorance of basic economics.

The new limits on MLRs are forcing insurance companies to cut expenditures in ways which will reduce consumer choice and in the long run lead to greater waste and expense.

The National Association of Insurance Commissioners has submitted a resolution to HHS explaining this detrimental effect and requested the following corrective actions:

The Department of Health and Human Services should take whatever immediate actions are available to the Department to mitigate the adverse effects the MLR rule is having on the ability of insurance producers to serve the demands and needs of consumers and to more appropriately classify independent producer compensation in the final PPACA MLR rule. The potential options available to HHS include: (1) approving state MLR adjustment requests; (2) placing an immediate hold on implementation and enforcement of the MLR requirements relative to independent agent and broker compensation; and (3) considering the NAIC’s finding that a significant portion of insurance producer activities are dedicated to consumer advocacy and service and therefore classifying an appropriate portion of producer compensation as a health care quality expense for purposes of Section 2718 of the PPACA.

It is an outrage that companies have to beg government officials for the freedom to operate their businesses as they see fit. Americans must not be blinded to how the ACA ramps up this inappropriate use of government power.