In a controversial decision (especially among health insurance brokers), the Obama administration issued or rather reissued a rule that is likely to crush many health insurance agents. Fees or commissions paid to us by insurance carriers won’t count as medical care under the MLR rule.
Some people like David below doubt that brokers (like me and my company East Coast Health Insurance) even satisfy a need. Read his charming thoughts;
Will someone please tell me what value a health care insurance broker offers consumers. In 2014, the exchanges will open up and anyone with a computer can go online to purchase a plan that suits their needs. Why do we need brokers after January 2014? In my view, they are just adding to the already outrageously high cost of health care that currently pushes over 50 million Americans out of the market and also made sure that another 25 million that are under-insured and don’t know what coverage they have until they go to use it and find out they’ve been seriously restricted. Face it folks, AHIP, the AMA and PhRMA have ruined America’s health care system. They had their chance to make things work for consumers and they chose profits ahead of consumers. Americans need Obamacare and, further still, they need a Robust Public Option included in every health care exchange. The sooner we make health care work for the consumer, the sooner we will take back control of America’s health care system.
Do you know what they are doing now? Selling minimeds! Minimeds exist mostly to rip off people as they won’t cover any meaningful expenses should you need them too. People can and will die from this coverage. If I had my wish I would kick these shysters out of the business merely to validate our argument that brokers do provide a benefit. By the way, if anyone that works for a minimed shop or carrier actually has a minimed on themselves I will pay them $500. That’s how sure I am that while they sell this garbage all day, they carry real coverage on themselves.
In the end the consumer advocates won by arguing that commissions are clearly administrative costs and removing them would make it easier for insurers to avoid paying the required rebates to consumers. Those rebates will go out next year to individuals and small-business policyholders whose insurers fail to hit spending targets this year. The rebates could come in the form of reduced premiums or actual tax free rebate checks.
The rebates just became tax free as under an earlier rule, rebates to employers would have been taxable, so the final rule legislates that any rebates given for employer policies should be in the form of lower premiums or “in other ways that are not taxable.” It will then be up to the employer or group policyholder to “ensure that the rebate is used for the benefit of subscribers.” In addition, the rule requires insurers to provide notices of rebates not only to the employer, but also to the enrollees.
“If your insurance company doesn’t spend enough of your premium dollars on medical care or quality improvement this year, they’ll have to give you rebates next year,” said CMS Acting Administrator Marilyn Tavenner, who is in her first day as chief of the agency. “This will bring costs down and give insurance companies the incentive to focus on what matters for patients – high quality health care.”
Just to be clear though, we are not dead yet as the final rule does not explicitly address the plea from brokers and agents, instead leaving the calculation of administrative costs unchanged from the original draft.
While many will argue that the broker commission is a benefit to consumers and that it will slow premium growth is partially correct. Though partially in my opinion amounts to less than 10%. Anyone that believes health care and health insurance costs rise due to health insurance companies needing to make profits is completely incorrect. However, insurance companies will likely stop doing business with hospital and providers that let fees continue to rise. We are seeing Aetna and UHC currently battling hospitals in North Florida on this very matter.
In conclusion, it is not necessarily the health insurance companies that are corrupt but the hospitals. If you don’t think that the medical field is becoming a bubble check out its growth over the last 10 years. It is likely to make the housing crash look like a fart next to Staten Island.
