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Broker Commissions Slashed $300 Million Under ACA

An advocacy group that promotes greater access to healthcare for the uninsured says agents and brokers suffered a loss of $300 million in commissions in 2012 as a result of the Medical Loss Ratio provision in the Affordable Care Act...
November 26, 2014

An advocacy group that promotes greater access to healthcare for the uninsured says agents and brokers suffered a loss of $300 million in commissions in 2012 as a result of the Medical Loss Ratio (MLR) provision in the Affordable Care Act (ACA). The report by the Commonwealth Fund said that in order to meet the ACA requirement that insurers spend at least 80% in the individual market and 85% in the group market of premium dollars on direct medical costs, agent and broker expenses fell by nearly $300 million in individual, small and large group markets.

What It Means to Agents: This confirms what many PIA members have been reporting, that their income from health insurance sales has decreased dramatically. PIA is continuing to urge Congress to pass legislation that would mandate that agent and broker compensation not be calculated as part of administrative expenses under the MLR.

PIA's analysis of the Commonwealth Fund report raises an interesting question: The report says that overhead has been reduced and that insurers reduced their administrative costs without increasing their profits, but the amount of money spent on quality improvement remains at less than one percent. Other expenses have either remained stable or gone down, while premiums have remained stable. So where is all the money being saved from cutting agent and broker compensation going?

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