MLR bill will add $1 billion to deficitNews added by Benefits Pro on November 9, 2012
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By Kathryn Mayer

H.R. 1206—the bill that would exempt insurance agents’ commissions from the medical loss ratio calculation—could cost the federal government about $1.1 billion over the next decade, according to budget analysts at the Congressional Budget Office.

The CBO on Wednesday estimated that enacting the bill would increase the budget deficit by $531 million between 2013-2017 and by about $1.1 billion between 2013-2022.

The PPACA requires insurance companies to spend 80 percent or 85 percent of their premiums on health care costs, leaving only the remaining 15 percent or 20 percent for profit and administrative expenses. The difference then goes back to policyholders in rebates. The Department of Health and Human Services said the MLR rule saved consumers about $1 billion this year.

The House Energy and Commerce Committee passed H.R. 1206 Sept. 20, though its future in the more evenly-divided Senate later this year is more unclear. At the crux of the argument over the issue is politics: Republicans support the bill, saying it would protect the jobs of agents and brokers, while Democrats argue it would weaken an important consumer protection.

The bill was introduced last March by Rep. Mike Rogers, R-Mich. and Rep. John Barrow, D-Ga.

The CBO estimates that H.R. 1206 could increase health insurance premiums by 0.2 percent on average over the next few years and 0.1 percent in later years. For consumers, the bill could cut rebate payments by 60 percent to 70 percent at the beginning and by about 40 percent to 50 percent later, CBO analysts said.

The insurance community has praised the bill, saying it will avoid a “devastating financial impact” on agents and brokers.

“While we agree with the goal of providing consumers with more value for health care dollars spent, the PPACA MLR requirements significantly and negatively impact access to health insurance agents and brokers, at the very time our economy and health care consumers need the most help,” NAHU CEO Janet Trautwein said earlier this fall.

Originally published on BenefitsPro.com
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