By a vote of 219-212, the U.S. House of Representatives passed the Patient Protection and Affordable Care Act (H.R. 3590) on Sunday March 21. The bill had previously been passed by the U.S. Senate by a vote of 60-39 on December 24, 2009. President Obama signed the bill into law on Tuesday March 23, 2010.

The Senate is currently considering a “fixes” bill that was also passed on March 21 by the House. Action on it is expected this week. The bill eliminates provisions such as increased Medicaid payments only to Nebraska, which had been added to secure the vote of Sen. Ben Nelson (D-Neb.). The fixes bill as it is called would also close the “donut hole,” a gap in Medicare prescription drug coverage; increase insurance subsides for low-income Americans; narrow and delay a tax on high-value insurance plans; and help states pay for Medicaid, among other things.

What It Means to Agents: Throughout this long and arduous debate, PIA’s focus had been clear: Agents First. Our primary concern is ensuring that professional independent insurance agents will be able to sell health insurance policies under any distribution system that might have emerged from Congress. In this, we were successful. The bill that was signed includes language PIA supported that ensures agents will be able to sell policies offered through the health insurance exchanges that will be set up. In addition, the Senate fixes bill does not change these agent provisions. Originally, agents would have been barred from selling through the exchanges.

Now, unless court challenges to this legislation are successful (see item #5), the focus will shift to the implementation process. This bill authorizes a number of federal bureaucracies to institute new policies. Over the next few years, as these measures are implemented, we will have to continue to make certain that agents aren’t written out of the equation by the federal entities involved in writing regulations to implement the law.

Another area of concern to PIA is the provision in the Senate bill that imposes an 80-85 percent medical loss ratio, depending on the market segment. Currently, the medical loss ratio in the private market can sometimes be as low as 60 percent. A mandate that 80-85 percent of premium be expended on medical services could conceivably put pressure on non-medical expense items, such as agent commissions. We are seeing a similar scenario being played out with crop insurance, involving proposed cuts to the crop Standard Reinsurance Agreement (SRA). The National Association of Insurance Commissioners (NAIC) is working to uniformly define what counts as a medical versus an administrative expense.

March 25, 2010