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Florida insurance agents protest 'medical loss ratio' provision in health care law

TALLAHASSEE — Naples insurance agent Mark Fiacable says a part of the federal health care act destroyed his business and caused him to lose his home.

Joan Galletta, who works at a Jacksonville insurance agency, says the same provision of the law led to staff cutbacks and a co-worker who left the industry because revenue decreased.

In Pompano Beach, insurance agent William Kohn says he can't afford to hire an assistant, which is affecting the quality of service at his business.

They all blame their losses on a portion of the federal health care law that mandates insurance companies spend at least 80 percent of premium dollars from individual plans on medical costs. Companies that failed to meet the threshold in 2011 must issue rebates to customers this year.

In an attempt to reduce overhead costs to comply with the law, insurance companies are reducing agent commissions and eliminating referral fees, according to letters and emails state insurance regulators released Friday. These documents were sent to the federal government to support the state's argument that it should be granted flexibility under the 80-20 rule, known as the medical loss ratio provision.

But that may be a long shot. The U.S. Department of Health and Human Services already told the state "no" last month, but Insurance Commissioner Kevin McCarty is asking for reconsideration.

Some of the same arguments contained in the letters sent Friday have already been rejected. In his initial ruling that the state was ineligible for a waiver, Health and Human Services Deputy Administrator Steven Larsen said companies can and have adjusted their practices to meet the 80 percent standard without making major or harmful changes in how they do business.

But that is part of the problem, according to the agents and insurance companies who sent about 30 letters to McCarty's office via the Florida Association of Health Underwriters, an industry trade group. As companies cut back to reduce overhead costs, agencies that sell individual health plans are receiving less money. That is contributing to a dwindling workforce and affecting customer service, they say.

Not everyone agrees. The insistence that Florida's insurance market will be destabilized without a waiver of the 80-20 rule is baseless, said Ethan Rome, executive director of Health Care for America Now.

"If it were true, it would have occurred," Rome said. "On its face, that is an absurd claim."

He said the number of insurance agents and brokers has actually increased in recent years. Companies began reducing commission and payment policies years ago as a result of skyrocketing premiums, not because of the medical loss ratio provision, Rome said.

Meanwhile, most health insurers in Florida have already met the 80 percent standard. It won't be clear until this spring which companies will owe rebates and how many policyholders will be affected.

Humana, one of the companies at risk of owing rebates this year, submitted a letter applauding McCarty's efforts to obtain a waiver. Companies need additional time to implement changes necessary to adhere to the new rules, vice president Steven DeRaleu wrote.

Tia Mitchell can be reached at tmitchell@tampabay.com or (850) 224-7263.

Florida insurance agents protest 'medical loss ratio' provision in health care law 01/06/12 [Last modified: Friday, January 6, 2012 8:52pm]

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