Waivers So That Brokers Can Get Paid

Filed in National by on June 1, 2011

Or maybe the title ought to be Waivers for Nothing And Your Chicks For Free.

Today’s NJ has a spectacular bit of reporting on the effort by the Insurance Commissioner to request waivers for two insurance firms in Delaware. The waiver is a request to allow companies that can’t get to the 80% rule (80% of all premiums have to be spent on medical care) required by the ACA some additional time to get to that requirement, but still offer their insurance products in the state.

Think about that for just a second. The waiver is being requested to specifically get around one of the key cost control features of the ACA — meant to ensure that more of your premium dollar is spent on your medical care and NOT on administration or overhead. Interestingly, these waivers don’t seem to be in the pipeline because these companies have issues getting to the 80%, but because insurance brokers are seeing their commissions cut:

In response to the new federal rule, health insurers in Delaware have slashed brokers’ commissions by as much as 80 percent to reduce overhead costs, according to brokers and the insurance office.

Stewart’s waiver request came after a lobbying effort on behalf of the thousands of insurance brokers operating across the state. Brokers said they need a waiver to boost commissions and retain agents, who are fleeing the business. Efforts to exclude commissions from administrative cost calculations have been launched nationally, but have been unsuccessful.

On top of this, it looks like the ICs office has just gone off to request these waivers pre-emptively — without a stated threat from these companies to leave the marketplace. We don’t know if they would, but we do know that the state’s insurance brokers are looking to the ICs office to save their bacon. It isn’t clear to me, though, that even if these companies get their waivers that they would increase their commissions to brokers. I would expect that these big companies will hang on to whatever funds they can — because the waivers don’t last forever. But what is true is that the request for this waiver doesn’t have anything to do with consumers — who would be out either their rebate checks OR more of their premiums available to pay for their health care.

One thing to keep in mind as you watch insurance companies accommodate the requirements of the ACA is that they *have* to change the way they do business, meaning that there are likely insurance related jobs that will go away. That’s too bad, but then, some part of the reason why your premiums are so high is due to the overhead these firms carry. Changing how they do business is one of the ways to get you better value for your premium dollar.

Better value for your premium dollar ought to be the business of the IC’s office — not whether or or not commissions are high enough for brokers. One of the people in Jonathan Starkey’s article sent off a letter to the HHS asking that they deny the request. You should too.

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"You don't make progress by standing on the sidelines, whimpering and complaining. You make progress by implementing ideas." -Shirley Chisholm

Comments (24)

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  1. MJ says:

    Just another reason why she needs to be replaced.

  2. Jason330 says:

    Shorter KWS: “Stratospheric Insurance Company CEO salaries must be preserved at all costs.”

  3. skippertee says:

    Yeah, what’s with this horseshit?
    The Insurance Commissioner’s office exists to serve the public.
    That SHOULD mean the overwhelming number of policy holders receiving a rebate should TRUMP a couple of dozen policy WRITERS every fucking time.
    But no……The IC’s office is erecting STRAW MEN to scare the public into accepting their unacceptable position.

  4. Just when some people might be feeling a little sympathetic towards KWS, she once again demonstrates why she has no business holding that office, or any other public office.

  5. puck says:

    Insurance brokers? How many people are we talking about here? How many insurance brokers does Delaware need? Let’s get a handle on the numbers…

    Stewart’s waiver request came after a lobbying effort on behalf of the thousands of insurance brokers operating across the state.

    “thousands??”

    Conservatively interpreting that as 2000 brokers, that is one broker for every 500 Delawareans.

    Combined, Aetna and UnitedHealthCare, which operates as Golden Rule in Delaware, have nearly 6,200 individual insurance customers here…

    How many brokers do we need to sell insurance to 6200 people? How come that job isn’t simply outsourced to the lowest bidder like they do with every other job?

    Maybe those 6200 people are the same high-net-worth individuals Gov. Markell fears will leave the state if we raise taxes on the upper brackets?

  6. PBaumbach says:

    disregard–should be in open thread

  7. anon says:

    The real question is who is the guy sitting in her office behind closed doors paid as a consultant? Consultant to who? Why is her boyfriend the head of the medical society…talk about inbedded! We dont have a clue what this woman is doing, but somebody better figure it out soon.

  8. anon says:

    Thinking Jack is not supportive of this act by Stewart. Why do you think she went to NY during the campaign and came back with thousands of dollars. Welcome to the corporate State insurance companies and your lobbyists!

  9. anon says:

    My understanding is that she is giving out waivers to insurance companies who do not have the cash to back up their clients claims. She is “waiving” the demand they have the cash and resources in the bank! this woman is nothing but a naive tool for the insurance companies and their lobbyist friends.

  10. cassandra_m says:

    The waiver is as reported — it is to waive the current medical loss ratio. It isn’t because these companies don’t have the cash or resources. If *that* were true, these companies, their policyholders and KWS would have WAY bigger problems.

  11. cassandra m says:

    puck has an interesting question — just how many brokers or agents are we talking about here in Delaware who might be seeing their commissions cut back? And then, once the exchanges are in place — how many brokers or agents will you need to sell individual insurance policies?

    People selling medical insurance might go the way of travel agents — there will be some left who deal with corporate accounts or specialized applications, but there is no doubt that these middlemen are some of the low-hanging overhead fruit to go in cutting back health care overhead.

  12. puck says:

    I think the “thousands” of brokers are the professional membership of brokers for all kinds of insurance, who are mostly not affected by the HRC cost ratios. For the brokers selling to the 6200 health insurance customers, it is likely a very small handful of brokers who KWS (or her office) probably knows by name. This is special-interest lobbying at its narrowest.

  13. PBaumbach says:

    how many insurance brokers are there? easy–just go to the campaign finance reports of KWS or Deb Hudson. There’s a count there–the number of donors.

  14. anon says:

    See more on Karen Weldin Stewart and this subject on the link below.

    http://delawareliberal.net//2011/05/31/delaware-general-assembly-pre-game-show-tues-may-31-2011/

  15. cassandra_m says:

    Oh dear.

    KWS on Loudell now trying to make the case that the $1.6M rebate number isn’t real. That it is an actuarial number and actuarial numbers aren’t real. Even though these numbers are real enough to power the risk management of an entire industry.

    And making a case for making the brokers and agents whole as a way to help policy holders. Really?

    Loudell asked if her priority was policy holders or insurance interests. She says it is the policy holders — even though extending the overhead of brokers and agents in this waiver isn’t exactly going to help your premium get cheaper OR help these guys get to their 80% loss ratio.

    There’s more but am hoping he puts this up as a podcast.

  16. jason330 says:

    So Delaware’s Insurance Commisioner thinks that Insurance is some kind of shell game? I mean, I have always thought that it was, but I’m no insurance commissioner.

  17. anon says:

    Just heard Karen Weldin Stewart on WDEL with Allen Loudell; she is a train wreck and sounds absurd. I agree with Cassandra’s comments. KWS’s interview could be a comedy if we didn’t know she was serious.

    And then we hear beeping, confusion and scuffling noise in the background. Next, Elliott Jacobson announced himself. What was his purpose to be on the line, we can only guess?

    Perhaps in the future KWS can participate in a radio interview on her own and her Staff can listen on the radio. Just a suggestion.

    Finally, KWS tells the listeners to check out her Website for she is about the policyholders, she does not grandstand, say look at me or try to call attention to herself (paraphrased).

    So I look at her Website. The website screams, “It’s all about me”. With a cursory search, I could not find any articles posted that were critical of her and quite a few have been written in just The News Journal.

    Furthermore, the Website is all over the place and looks like it hasn’t been updated in about a month and a half. I have to conclude the policyholders of Delaware are not very important to Karen Weldin Stewart.

  18. Geezer says:

    The podcast is now posted at WDEL.com; the clatter early on when all her advisers hung up has been edited out. She still babbles on in an aggrieved tone for about 11 minutes, though.

    El Somnambulo’s Tuesday appearance has also just been posted.

  19. Jason330 says:

    OMG! worse than I even imagined. Loudell does a good job trying to dumb it down for her.

  20. cassandra m says:

    Thanks, Geezer!

    This is pretty incoherent on her part. So starting with the dissembling on the $1.6M — she says that there might not be any rebate to policy holders. WHAT? The medical loss ratio rules say that if you haven’t gotten to the threshold, you owe policy holders a rebate. Period.

    Then take a look at this WSJ notice on the release of the HHS final regs on medical loss ratio. Note that the NAIC was trying to get broker costs out of the administrative cost pool, which is amazingly counter productive. Broker costs are clearly not health care and so should be in the pool. The fact that brokers are losing their commissions is a function of insurance companies not paying them — not because policy holders or even Insurance Commissioners made any decisions here.

    Again, I don’t see how this can be a problem for the IC to address since even more of these brokers and agents will go away once exchanges are set up. You’ll probably be buying your insurance from something that looks like Expedia or Travelocity, really.

    What was that exchange about retraining brokers or agents? Seriously? And who is picking up the tab for this?

    And best of all — the biggest problem she sees with Single Payer is the lack of primary care physicians. And with the Canadians Fail argument tacked on. Sheesh.

  21. Geezer says:

    Cass: I think we should forward those comments about actuarial numbers being fictional to some actuaries. They were shoved under the bus in about 15 seconds. What a loyal gal!

  22. cassandra_m says:

    We should also start asking whether Any Actual Actuaries Were Involved In IC Decisions. Because apparently their data isn’t to be trusted (wonder if she thinks that this extends to their checks too?). So we have an IC with credibility issues who is spreading those credibility issues to her actuaries.

    Bet they’re delighted.

  23. PARADIGM SHIFT says:

    Sorry I’m late to the comments, but here is the email address for the HHS Waiver Comments site along with a copy of my email. The more consumers who object, the better the chance for refusal or modification by the FED.

    To: MLRAdjustments@hhs.gov
    Cc: gene.reed@state.de.us; Starkey, Jonathan; karen.stewart@state.de.us
    Subject: Deny Delaware Insurance Commissioner Weldin-Stewart’s Request for Waiver

    As a Delaware resident and customer of Delaware Blue Cross-Blue Shield, I am adamant that you DENY the request by Delaware Insurance Commissioner Karen Weldin Stewart for waiver or phase-in of a reduced Medical-Loss Ratio for Delaware based health insurance companies.

    The provision in the Federal Health Care legislation that mandates health care insurance companies meet a 80% Medical-Loss Ratio is the only means of soundly regulating these companies to actually provide health care services and not use customer premiums to fund unnecessary advertising, lobbying of elected politicians and providing excessive compensation to company executives and shareholders.

    The current Delaware requirement for a 60% Medical-Loss Ratio is a mean joke on the in-state health care insurance consumers, like me, who must purchase this insurance product. I really doubt that Aetna will go out of the health care insurance business if they have to meet the 80% threshold.

    Please do not allow the Delaware Insurance Commissioner to continue to act solely in the interest of the insurance corporations based in Delaware and not in the interest of the Delaware consumers who she routinely ignores. Please deny the request for a Delaware Waiver or Reduction in the 80% Medical-Loss Ratio Law.

  24. anon says:

    The News Journal today: “Blue Cross Blue Shield of Delaware to restore transplant coverage”

    http://www.delawareonline.com/article/20110603/BUSINESS/106030359/Transplant-coverage-return-Blue-Cross-policyholders?odyssey=mod|newswell|text|Home|s

    Where is Karen Weldin Stewart? She wasn’t fighting for policyholders here.

    This issue wasn’t important enough to take a moment and make a comment.