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Consumer Watchdog, In Opposition

Consumer Watchdog, In Opposition. The Professional Advisers legislation harms consumers and the intent of health reform. Sponsoring the legislation pushes NAIC far from its balanced role in writing ACA regulation. Hastily presented measure would:

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Consumer Watchdog, In Opposition

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  1. Consumer Watchdog,In Opposition The Professional Advisers legislation harms consumers and the intent of health reform

  2. Sponsoring the legislation pushes NAIC far from its balanced role in writing ACA regulation. Hastily presented measure would: Serve a single interest at substantial harm to consumers, taxpayers, even providers Gut ACA limits on insurer administrative spending, crippling regulations that were defined by NAIC. Effect on NAIC

  3. NAIC is data-driven, yet offers none on this unexamined proposal: No data on broker commissions No data on broker payment history or need for legislation No verifiable way to calculate effect on consumers, taxpayers A Pig in a Poke

  4. Before:Joe’s premium, including 10% broker commission, is $10,000/year Insurer spends $7,500 on medical care. Administrative costs and profit come to $3,500 Medical care ratio is75% Joe is owed 5% rebate of $500 After: Joe’s premium is still $10,000, but 10% commission is deducted from premium before medical care ratio calculation. Insurer medical care spending remains $7,500, but administrative portion falls to $2500. Medical care ratio is83% (no rebate owed, premium increase expected) Unconsidered Effect: Insurers would fire employee sales staff, who remain an administrative cost The Hypothetical Consumer

  5. Consumer Watchdog obtained a producer agreement showing the financial pressures on brokers. Kaiser Foundation of Georgia’s 2010 commission schedule: Individual policies: 11% for both sale and renewal A Real-World Example

  6. Kaiser, cont. Small-business broker commissions, 2-50 employees: Very healthy, 7.0% (“health risk level A, B, C”) Medium healthy, 5.5% (“risk level D-H”) Less healthy, 4.4% (“risk level I, J, K”) This is a 37% pay incentive to deliver only the healthiest applicants; is the broker really independent?

  7. The legislation defies NAIC’s stated commitment to protect consumers The legislation’s only beneficiaries are brokers and insurance companies Consumers are harmed by loss of rebates and/or higher premiums, resulting in higher uninsurance. There is no amendment or fix to this legislation that can undo its core aim of protecting the profits of one industry NAIC: Stay On Your Mission

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