Two U.S. senators have drafted a new legislation that would exclude insurance agencies from the medical loss ratio provision of the Affordable Care Act. The provision requires insurers to spend no less than 80% of the money they collect from premiums on improving medical care. The provision would have dire implications for agents as it includes the money they collect from commissions. Senators Mary Landrieu, D-La., and Johnny Isakson, R-Ga., have introduced the legislation to the House of Representatives and hope that it will bring insurance agents the protections they need.
The Affordable Care Act is meant to make the insurance industry more efficient that it has been in the past. The law would hold insurers more accountable for their actions and business practices, but takes little consideration of independent insurance agents and agencies. The medical loss ratio provision, in particular, could cripple an agent’s livelihood by diverting a significant portion of their commissions toward the cost of medical care.
The law provides no differentiation between agent compensations and premiums collected by insurance companies. The senators hope to add some clarity to the law with their new legislation, called S. 2068. The bill already has support from the Independent Insurance Agents & Brokers of America as well as other agent advocacy groups throughout the country. If successful, insurance agents will not be held liable for the medical loss ratio provision.
