From NAIC Consumer Representatives: Key Consumer Protection at Risk


Dedicated to affordable, quality healthcare and coverage for all Americans.

This Press Release is being issued by Consumers Union as a courtesy to NAIC consumer representatives.

The undersigned consumer representatives to the National Association of Insurance Commissioners are very disappointed in the vote taken today by the NAIC Professional Health Insurance Advisor’s Task Force to endorse HR 1206, the Rogers Bill, which would take broker and agent compensation out of the medical loss ratio (MLR) calculation created by the Affordable Care Act. 

The Affordable Care Act requires insurers to spend at least 80 percent of their premium revenue on healthcare claims and quality improvement costs (85 percent for large groups). Insurers who miss this target are required to rebate the difference to consumers, beginning with this year.

The minimum MLR is an important short term consumer protection provided by the Affordable Care Act.  Had the provision been in effect for 2010, insurers would have had to rebate almost $2 billion to consumers. 

As insurers have cut their administrative expenses to comply with the MLR requirements, some have reduced compensation to agents.   The NAIC was asked to endorse the Rogers bill.  In March, the NAIC commissioned a study to determine whether this legislation was advisable.  An NAIC actuarial task force studied the question and issued a comprehensive report (available here: ).  That report was, however, as was admitted today by the Professional Health Insurance Advisor’s Task Force, inconclusive.  It found that some insurers had reduced agent compensation, but some have not.  There is no evidence that consumers are being hurt by this.  It found, however, as was already noted that rebates would be cut significantly if the Rogers bill passed.

Further, the NAIC’s study estimated this change would cost consumers $1.27 billion in rebates.  It would also take the pressure off of insurers to reduce premiums.  As the purchase of insurance is heavily subsidized by federal tax expenditures, this legislation will also increase the federal budget deficit.   

Moreover, there is no guarantee that insurers will in fact increase agent compensation if this legislation passes.  They can simply take the commissions they are currently paying out of the MLR calculation and pocket the excess as profits.

The decision made by the Task Force today is not supported by the evidence and not in the interest of consumers.  We, appointed consumer representatives to the NAIC, urge the full NAIC Executive Committee to give the full NAIC plenary the opportunity to consider and vote on an issue with such important ramifications for consumers and taxpayers.  Moreover, we urge the full NAIC  to reject the recommendation that the Task Force made today.  There is no guarantee that the Rogers bill will help agents and brokers.  It is clear, however, that it will hurt consumers and taxpayers. 

For more information please contact: Timothy Jost, 540 421 1529 or Barbara Yondorf,, 720 979 5702

Timothy Jost, Lynn Quincy, Georgia Maheras, Elizabeth Abbott, Barbara Yondorf, Stephen Finan, Kimberly Calder, Joe Ditre, Bonnie Burns, Stacey Pogue, Stephanie Mohl, Aaron Smith