GOP MLR Bill Will Add to Deficit, States CBO

The Hill, by Elise Viebeck –

November 08, 2012:

A Republican bill altering the healthcare law’s medical loss ratio (MLR) will add about $1 billion to the budget deficit over the next decade, the Congressional Budget Office (CBO) said Thursday.

The Obama administration frequently touts the MLR as a policy that helps consumers. It mandates that insurers spend no less than about 80 percent of their premium dollars on medical care rather than administrative costs or profits. The difference insurance companies must send back to policyholders, producing more than $1 billion in consumer rebates this year.

Rep. Mike Rogers’s bill (H.R. 1206) would exclude insurance brokers’ fee from counting as administrative costs under the ratio. Agents say the MLR in its current state threatens their business by incentivizing insurers not to work with them.

Rogers’s bill would also make it easier for states to obtain waivers for some MLR requirements. It passed the Energy and Commerce Committee in September and has 221 cosponsors, including 25 Democrats.

On Wednesday, the CBO 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 estimates assume no pay-for measures for the bill.

Some Democrats oppose the measure, saying it would weaken standards designed to protect consumers. Some experts also question how much the MLR threatens insurance brokers’ business, arguing that agents are also the victims of an increasingly unfriendly market.

But Republicans say the bill is important to ensure that consumers can still avail themselves of brokers’ help.

Energy and Commerce Chairman Fred Upton (R-Mich.) said in September that under the current MLR, “it will become harder to shop for a plan you like and can afford” as agents see less business.

Source: John & Rusty Report via Choice Admin