The Congressional Budget Office said in a report that a Congressional fix to exclude broker commissions from medical loss ratio calculations will increase deficits by $531 million over the 2013-2017 period.
The deficit would further increase to about $1.1 billion over the 2013-2022 period, including a $127 million decline in off-budget Social Security revenues, according to the report, released Wednesday.
The analysis from the nonpartisan CBO was ordered by the House Energy and Commerce Committee, which in late September passed the bill that protects broker revenue from the MLR provision of the Patient Protection and Affordable Care Act by a 26-14 vote.
CBO found that removing agent commissions would reduce rebates to plan participants by between 60% to 70% initially — then declining to between 40% and 50% by the end of the 2013-2022 period. “Because MLR requirements would be easier to achieve under [the bill], insurers would have less incentive to reduce administrative costs than under the current law,” the CBO report said. “Both of these effects are expected to result in an increase in premiums relative to current law.”
The bill would therefore increase premiums by nearly two-tenths of a percent on average over the next five years, declining to less than one-tenth of a percent by the end of the 2013-2022 period, the report, approved by Holly Harvey, CBO deputy assistant director of budget analysis, said.
The National Association of Health Underwriters, which is a strong supporter of the legislation, said in response that “there are many long-term cost benefits of H.R. 1206 that this study fails to include in the calculations.”
NAHU CEO Janet Trautwein said that “there isn't clear evidence that the MLR requirements have lowered health insurance premiums. In the states that tried loss-ratio caps prior to the passage of national health reform, premiums and health care costs are not lower and health care quality is not better. Instead, these requirements have actually discouraged health plan investments in programs that generate long-term medical care cost savings and improve health care quality.”
A companion bill to H.R. 1206 remains stalled in Senate committee. The Senate bill, led by Sen. Mary Landrieu (D-La.), carves out commissions for individuals and small groups from the MLR. “Should that bill advance, there would have to be some sort of reconciliation between the two bills,” said Joel Kopperud, director of government relations for The Council of Insurance Agents & Brokers, in late September. “But movement in that chamber on anything that touches Obamacare — at least before the next Congress — does not look likely right now. It’s certainly not for lack of effort. But the national politics at the moment keep this on Harry Reid’s back burner.”
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