By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    An Expert’s Guide To Building and Improving Endurance
    June 30, 2022
    medical assistants
    What Do Medical Assistants Do On a Day to Day Basis?
    April 5, 2022
    superfoods to help with prostate health
    10 Healthy Foods That Can Help Protect Your Prostate
    August 29, 2022
    Latest News
    5 Steps to a Promising Career as a Healthcare Administrator
    August 3, 2025
    Why Custom Telemedicine Apps Outperform Off‑the‑Shelf Solutions
    July 20, 2025
    How Probate Planning Shapes the Future of Your Estate and Family Care
    July 17, 2025
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    healthcare cost crisis
    What If the Health Care Cost Crisis Solves Itself?
    May 11, 2013
    Do You Need Life Insurance? What Does It Cover?
    December 23, 2022
    HIE metal plans
    The Four “Metal Plans” of Health Insurance Exchanges
    May 28, 2013
    Latest News
    How IT and Marketing Teams Can Collaborate to Protect Patient Trust
    July 17, 2025
    How Health Choices and Legal Actions Intersect After an Injury
    July 17, 2025
    How communities and healthcare providers can address slip and fall injuries with legal awareness
    July 17, 2025
    Let Your Lawyer Handle the Work Before You Pay Medical Costs
    July 6, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: New Regulation Threatens Agents, HSA Plans
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > New Regulation Threatens Agents, HSA Plans
BusinessNewsPolicy & Law

New Regulation Threatens Agents, HSA Plans

JohnCGoodman
JohnCGoodman
Share
5 Min Read
SHARE

HHS recently issued its final standards on how to rebate money from insurance carriers that fail to reach the Medical Loss Ratio (MLR) standards for 2011. This has sparked a new flurry of attention to the MLR issue, which requires insurers to spend no more that 20% of premium on administration in the small group and individual markets and 15% in the large-employer market.

HHS recently issued its final standards on how to rebate money from insurance carriers that fail to reach the Medical Loss Ratio (MLR) standards for 2011. This has sparked a new flurry of attention to the MLR issue, which requires insurers to spend no more that 20% of premium on administration in the small group and individual markets and 15% in the large-employer market.

Importantly, HHS decided not to exempt broker and agent commissions from being included in the administrative cost side of the equation despite a new National Association of Insurance Commissioners (NAIC) resolution urging it to do otherwise.

The Kaiser Family Foundation has taken a look at how this decision will impact various states. It finds that, while commissions average about 6% of premium in the individual market and 5% for the small group market, it varies widely from state to state. KFF writes:

More Read

sealants_donut_2012-2017
Sales of Sealants, Hemostasis, Other Closure a Large, Shifting Market Worldwide
2014 Medicare Payment Cuts for Radiology Services
What Is the Scoop with Medicare?
Commercial Speech Trumps Privacy When It Comes to Drug Marketing
Marriage Penalties in ObamaCare

Interestingly, the amount insurers spend on brokers compensation varies quite a bit from state to state. In the individual market, commissions range from less than 1% of premiums on average in Hawaii and Vermont to nearly 10% of premiums in South Carolina and Delaware. In the small group market, broker compensation accounts for less than 1% of premiums in Alabama and North Dakota, compared to about 7% of premiums in Utah and California.

The difference is due to a number of factors, but the biggest one is probably competition. If a single company has a near monopoly it is not necessary to spend much on marketing and sales.

This suggests a fairly obvious consequence of the MLR regulation. If monopoly leads to lower administrative expenses, and hence higher MLRs, due to low marketing costs, the opposite is likely to happen as well — a requirement for higher MLRs will lead to monopoly.

Dan Perrin, of the HSA Coalition, notes another consequence — instead of lowering the cost of coverage, the MLR will raise it. He argues that lower-cost “bronze plans” and HSAs will be banished from exchanges because both achieve their lower premiums by having higher out-of-pocket responsibilities. The out-of-pocket spending is not counted in the MLR calculation. He writes:

To repeat, just so everyone is clear: If an insurer pays for a health care service for their insured, the MLR rule counts that in their MLR rule. But if an individual pays for a health care service to meet their deductible, the MLR rule does not count that expenditure.

Let’s give an illustration:

  • I buy an insurance policy with no deductible that costs $5,000.
  • I have $4,000 in medical expenses.
  • That is 80% of my premium, so the health plans is in compliance.

However:

  • If I buy a policy with $1,000 deductible for $4,000 in premium,
  • And still have $4,000 in medical expenses.
  • I pay the first $1,000 directly to meet my deductible.
  • The health plan pays the remaining $3,000
  • That is only 75% of my $4,000 premium, so the plan is not in compliance.

Exact same total cost of coverage. Exact same medical expense. But one design complies and the other does not.

So, the consequences of the MLR regulation are:

  1. More monopoly, and
  2. Higher costs

And maybe that is why MLR regulations have never actually worked in the states that have adopted them over the years.

But, like everything else in ObamaCare, the law was enacted heedless of any evidence or logic and solely for political reasons.

   

TAGGED:health insurancehealth reformHHS
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

technology in medical research
The Tools Helping Medical Researchers See the Full Picture
News Technology
August 3, 2025
5 Steps to a Promising Career as a Healthcare Administrator
5 Steps to a Promising Career as a Healthcare Administrator
Health
July 31, 2025
holistic dental
Holistic Dentist Services Are Natural and Safe
Dental health Specialties
July 28, 2025
botox certification
Help Improve People’s Skin Health Via Botox Certification
Skin Specialties
July 22, 2025

You Might also Like

Telemedicine
BusinessMedical DevicesMobile HealthNewsTechnology

Video:Telemedicine on the Frontier

April 21, 2012
Medical Education

You’re a Year Away from Graduating Medical School. What Happens Next?

March 5, 2019

Teachers Get Free Botox in Buffalo

January 28, 2012
Baby care jobs
Public HealthSpecialties

A Baby Has Special Health Care Needs

October 17, 2012
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?