Rockefeller Warns GOP Healthcare Rebate Carveout Will Hurt Consumers, Increase Deficit

November 9, 2012

Consumer Protection 1WASHINGTON, D.C.— Chairman John D. (Jay) Rockefeller IV today warned against a House Republican proposal, which would exclude insurance agent and broker commissions from counting as administrative costs under the 80/20 rule in the Affordable Care Act.  Rockefeller pushed for the 80/20 rule to make sure that health insurance companies spend a larger portion of consumers’ premium dollars on medical care. The Congressional Budget Office (CBO) on Wednesday said that the carveout Republicans are proposing would add about $1 billion to the deficit over the next decade. According to the CBO score of H.R. 1206, removing agent and broker commissions from the 80/20 rule would also reduce future rebates by between 60 and 70 percent.

“The 80/20 rule has already saved consumers over $1 billion in rebates because health insurers are now required to spend more of consumers’ premiums on actual patient care,” said Rockefeller. “It is a good deal for Americans both as consumers and taxpayers. We can’t let House Republicans turn it into a lose-lose situation for consumers by increasing the deficit and allowing health insurers to spend more of consumers’ hard-earned premium dollars on marketing, administrative costs, and profits rather than actually increasing benefits and lowering premiums.”


Last year, Chairman Rockefeller commissioned a Commerce Committee Staff Report when the issue of carving out insurance agent and broker commissions first came to the Congress. The report showed how the 80/20 rule rebates would be reduced by more than 60 percent if agent and broker commissions were excluded from the MLR calculation. A copy of the report can be found here.