Insurance Commissioners Back Away From Bill To Pay Brokers More By Raising Health Premiums

Consumer Watchdog Cheers Decision to Probe Broker Pay Structure, Acknowledgement that Consumer Protection Needed

AUSTIN, Texas, March 28, 2011 /PRNewswire-USNewswire/ -- State insurance commissioners made an unexpected turnabout late Sunday, ending a drive toward support for a special-interest bill that would raise health insurance premiums for consumers. A key committee voted instead to examine in depth the bill sought by insurance brokers and health insurance companies.

Consumer Watchdog, which had sharply criticized the National Association of Insurance Commissioners for its apparent embrace of legislation written by the insurance brokers' lobby, cheered the turnabout. Though virtually identical legislation was recently introduced by Reps. Mike Rogers of Michigan and John Barrow of Alabama, it faces a tougher fight without the NAIC endorsement.

"Without the united backing of the state insurance commissioners, the legislation's special-interest authorship is laid bare and its aim—to protect large percentage commissions on health insurance sales—is easier to detect," said Judy Dugan, research director for the nonprofit, nonpartisan Consumer Watchdog. "We applaud the consumer-focused state commissioners who made their doubts known. They put the brakes on an industry pay bonus from the pockets of consumers and taxpayers."

The brokers' measure, misleadingly named the "Access to Professional Insurance Advisors Act of 2011," would change the federal health reform law to let insurance companies exclude broker commissions from their administrative costs when calculating how much they spend on actual health care.

Key points:

Current law requires insurance companies to pay consumer rebates if they spend less than 80% to 85% of premium dollars on health care.

The legislation, by excluding a chief administrative cost from the administration vs. health care calculation, would effectively take rebate money owed to consumers and pay it to brokers and the insurance companies.