Medical Loss Ratio goals and rules may be difficult for smaller carriers to meet and yet if many of the smaller carriers go out of business or are bought out, the choices for consumers in states can grow smaller, thus less competition among carriers.
Also with the move to moving everything online, some brokers and agents are concerned about their very existence as well as their future of compensation from perhaps going from commissions based on sales to a flat fee per policy sold. Overall it seems to be the same story again with spreading the money and care to keep everyone employed, insured and getting the care needed. As noted below one state is already asking HHS for an exception for one carrier so how this plays out remains to be seen as if that is done for one small carrier I would think others would ask for consideration too when looking at their ability to meet Medical Loss Ratios. BD
As Democrats on the campaign trail do their best to drum up support for health care reform by touting benefits that take effect this year, it's easy to forget that the full thrust of the Patient Protection and Affordable Care Act doesn't kick in until 2014. But by that point, a few major players in the health care industry might have already experienced a real downside of the massive overhaul, so much so that they may no longer exist.
Insurance agents and brokers and small insurance companies are among those who may have to scramble to stay afloat over the next few years. This is partly by design and partly an unintended consequence of a new law so sweeping it will affect nearly every corner of an industry that accounts for one-sixth of the U.S.
Agents and brokers are also worried about the future for another reason: a vital part of their current role, sales and marketing, could be made redundant thanks to the new state insurance exchanges that will go online by 2014.
Small insurers also watched the medical loss ratio rule-making with trepidation, aware that many will need to re-examine their business models if they are to survive under new regulations.
Despite this flexibility — still to be written regulations might allow small insurers to transition gradually to comply with new rules — some states nonetheless worry their insurance markets won't be competitive under health reform.
Maine's insurance commissioner, who supported the health reform effort, has already asked HHS to exempt one of its smaller insurers from new medical loss ratio requirements.