The Department of Health and Human Services today released its final medical loss ratio rule. In it, the administration rejected a National Association of Insurance Commissioners’ recommendation to exclude fees paid to insurance agents and brokers from insurance companies’ allowable administrative costs. You can read the document online.

The medical loss ratio refers to the percentage of premium dollars collected that get spent on medical care or activities to improve health care quality. Federal health reform requires insurers to spend 80 percent or 85 percent of premium dollars on medical care or quality improvement activities; the rest can go to things like marketing, administrative costs and profits. The fees paid to insurance brokers, who help consumers select and purchase health insurance, is also included in the 15 percent to 20 percent insurers have to spend on non-medical costs, which insurance brokers say has led insurers to slash their fees, hurting business. Last month, following a contentious debate and a close vote, the National Association of Insurance Commissioners recommended that HHS take action to mitigate the harm done to brokers.

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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