Critical Condition

Insurance Brokers Should Reverse Their Position on Obamacare

A recent story in Politico confirmed what was already known in health-policy circles: In order to meet Obamacare’s arbitrary Medical Loss Ratios (MLRs), health insurers are cutting commissions to brokers. (The MLR is the ratio of premiums to claims paid out to health providers.)

Fair enough, many might say: The point of establishing this arbitrary accounting target was to ensure more cash flow to providers than to middlemen. This outcome leads to an unhealthy schadenfreude for me, because I’ve always thought brokers should have advocated strongly for individually owned health insurance, instead of the current employer-based monopoly, but unfortunately, because most health insurers pay commissions as a percentage of premiums, brokers’ interests were not aligned with society’s interest in reforming the bloated and expensive employer-monopoly system.

The brokers’ primary trade association, the National Association of Health Underwriters (NAHU), failed to respond adequately to the threat of Obamacare. Naturally, it was tempted to believe that mandatory purchase of health insurance (which Judge Hudson in Virginia has inconveniently found to be unconstitutional) would guarantee its members a revenue stream, so NAHU endorsed an individual mandate. When Obamacare passed, NAHU complained that the mandate was “unworkable,” i.e. not tough enough.

As a result, brokers’ commissions are being cut in half. The quality of customer service provided to employers will surely decline — just as the Obamacrats churn out hundreds of pages of regulations impacting employers’ benefits every month.

Well, it’s never too late to admit an error. Like the U.S. Chamber of Commerce, which has finally and unequivocally declared itself in favor of repealing Obamacare, the brokers’ trade association needs to save its profession by doing the same.

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