Nevada Third State to Receive MLR Waiver

[YouGotMyMoney]

You keep saying this but you joke around so much I don't know how to take you on this LOL

no u see chumps wants all the leads for himself, already has ohio, pa and indiana on lock down, knows come 2014 we will be back to 30% commish......

 

[Crabcake Johnny]

Add New Hampshire to the MLR waiver list.

NHBR > Health insurers granted federal relief -- sort of

"On behalf of the state's individual market insurers, the New Hampshire Insurance Department filed a request in January to the U.S. Department of Health and Human Services for a decrease in the required medical loss ratio percentage - the amount of premium money actually spent on reimbursing care -- from the federally required 80 percent to 70 percent until 2014.

According to a response letter sent May 13 by the federal Center for Consumer Information and Insurance Oversight (a part of the federal HHS' Center for Medicare and Medicaid) to New Hampshire Insurance Commissioner Roger Sevigny, an exemption was granted - for 72 percent. In 2012, the ratio rises to 75 percent, and the full 80 percent by 2013."

 

[AndreaSti]

Why don't they just waiver everybody and start over?

 

[taterpeeler]

I sent you a PM.

wheres mine?

 

[CHUMPS FROM OXFORD]

You already know I'm kidding when I say "Get out now!"

 

[GreenSky]

You already know I'm kidding when I say "Get out now!"

Were you kidding when you told me 18 months ago that gold was a bad investment?

Rick

 

[somarco]

Why don't they just waiver everybody and start over?

That's the Republican game plan.

 

[Ann H]

So do you stay and play or bail? How do you stay a survivor and not become road kill? I am of the opinion that long term this isn't a career anymore no matter what happens. In the meantime:

Commissions will go back up if MLR is reversed. It will just take some time. I am saying this, because I look back historically over my 31 years in this business, and this sort of thing has happened before.

One carrier will begin a marketing push and offer higher commissions. Volume will move to that carrier so long as their product and administration are good. The next carrier will match it or beat it. There will be ups and downs, and certainly creative incentives that take us on curves in the path. But after a time, commissions will settle to a market rate. Carriers will find out (again) that insurance is sold not bought, and their clients who applied direct fall off the books at an alarming rate. They think they don't need agents, but they do. Look at the low enrollment in the National High Risk Pool as some proof (there's another current thread on this forum about that now).

It really doesn't matter if MLR is repealed or not, for this to happen. That's because MLR is calculated at a percentage. Twenty percent of a higher premium is a lot more money for a carrier to use for profit, administration and commission than 20% of a lower premium. And remember, that premium is rising at the rate of medical inflation, which is higher than the Consumer Price Index (CPI).

Look for carriers to do Per Member Per Month compensation. This controls their dollar outlay in commissions, yet gives them the ability to earn a percentage through MLR. That's smart on their part. They are looking at fixed expenses of administration and commissions. After all, just because medical inflation rises doesn't mean it costs more to rent their buildings or pay their staff. They think that making commissions "fixed" while earning 20% off a rising premium is smart.

However, sales agents will have no incentive to sell higher premium plans if they are paid a fixed PMPM no matter what type of plan the client buys. Carriers making 20% of lower premium plans will think this through. They'll offer a commission percentage again to spur sales. In fact, some experts predict that many carriers will drop their leaner products in favor of higher premium products. That's because the percentage of 20% will result in a higher dollar amount that they can keep for profit, admin., and commissions. You'd think that Obama could have thought this through........

Because the premiums are rising at the rate of medical inflation (much less rising due to Obamacare), the percentage we are paid may not be as high as it used to be. Don't let that discourage you, however. The dollar amount earned will be as high as it used to be. If you made 20% of a $400 premium, it's the same thing as 10% of an $800 premium, assuming your cost of living is about the same.

I can say this because I've lived through a few of these "dips and recoveries" before. When HIPAA laws were enacted, we saw our group sales commissions cut IN HALF immediately, and the carrier pool shrunk drastically. However, when HIPAA caused all group sales of 2-50 employees to be GUARANTEED ISSUE it made premiums to spike. Those of us who survived the dip saw a recovery of the dollar amount of commissions, although the percentage amount only barely inched up.

Commission percentage drops are not our real problem. The ability to sell inside the exchange, or to sell at all is our problem. Reform like we see in MA or NY that wipes out our ability to sell anything is a problem. The ability of our clients to pay the price of the new insurance plans is a problem.

If you have the ability to survive the coming storm, and if you can keep going until the inevitable recovery happens, you can make it through this.

In the meantime, perhaps our volume will rise as many agents exit the business. I know that mine has been rising. I'm not exactly sure why, but perhaps its because there's less competition now...

 

[CHUMPS FROM OXFORD]

Sometimes you make too much sense.

And Rick...I didn't tell you gold was a bad investment...I said giving out another gold wedding ring was a bad investment.

 

[somarco]

I can say this because I've lived through a few of these "dips and recoveries" before.

As have I.

This one is different.

Closest thing is ERISA that effectively killed the traditional pension market (except for unions and public employees). Didn't take but 5 yrs or so for that market to die.