Print ArticleSACRAMENTO - On Saturday, Governor Schwarzenegger signed into law a bill that will bring sunshine on commissions paid to brokers by healthcare insurance plans and providers. Assemblyman Solorio (D-Anaheim), author of the measure, applauded the Governor's action.
"Public agencies need to know what commissions are being collected so that taxpayers aren´t ripped off," Solorio said. "With this new law, the era of the hidden costs of commissions paid to healthcare insurance brokers and agents is over. Enacting AB 2589 is good for consumers and good for business."
Solorio authored the new law after recent lawsuits involving public entities revealed that in some cases, unscrupulous healthcare insurance brokers contracted with certain providers based on large undisclosed commissions rather than contracting with a provider based on the best and most affordable coverage.
"AB 2589 is an act of transparency that will ensure public entities that they are involved in an honest transaction without hidden costs. If it sounds simple, it is. The existence of this law will bring renewed and mutual trust to the negotiating table," Solorio said.
Trust became a factor when some public entities discovered after the fact that their healthcare insurance broker, even after agreeing to commission or other carrier compensation rebates in contracts, had not rebated those commissions to their client. In one instance, the Santa Ana Unified School District's contracted healthcare-insurance broker financially benefited from more than $3 million worth of undisclosed fees and commissions.
"This new law won't help us," said Santa Ana Unified School District Board Member Rob Richardson. "But we asked Assemblyman Solorio to craft legislation that would protect other public entities from this kind of abuse. Now, at least they will be protected."
The new law also addresses a healthcare-insurance commission structure based on total volume of business. Because of "contingent commission agreements" to brokers, public entities may have paid higher premiums to compensate for the additional commissions paid to the more successful brokers.
"I think the historic drama on Capitol Hill to bail out Wall Street has opened our eyes to the need for oversight and transparency in every area of our economy," Solorio added. "The Governor showed his commitment to oversight and transparency by signing our bill."
"Public agencies need to know what commissions are being collected so that taxpayers aren´t ripped off," Solorio said. "With this new law, the era of the hidden costs of commissions paid to healthcare insurance brokers and agents is over. Enacting AB 2589 is good for consumers and good for business."
Solorio authored the new law after recent lawsuits involving public entities revealed that in some cases, unscrupulous healthcare insurance brokers contracted with certain providers based on large undisclosed commissions rather than contracting with a provider based on the best and most affordable coverage.
"AB 2589 is an act of transparency that will ensure public entities that they are involved in an honest transaction without hidden costs. If it sounds simple, it is. The existence of this law will bring renewed and mutual trust to the negotiating table," Solorio said.
Trust became a factor when some public entities discovered after the fact that their healthcare insurance broker, even after agreeing to commission or other carrier compensation rebates in contracts, had not rebated those commissions to their client. In one instance, the Santa Ana Unified School District's contracted healthcare-insurance broker financially benefited from more than $3 million worth of undisclosed fees and commissions.
"This new law won't help us," said Santa Ana Unified School District Board Member Rob Richardson. "But we asked Assemblyman Solorio to craft legislation that would protect other public entities from this kind of abuse. Now, at least they will be protected."
The new law also addresses a healthcare-insurance commission structure based on total volume of business. Because of "contingent commission agreements" to brokers, public entities may have paid higher premiums to compensate for the additional commissions paid to the more successful brokers.
"I think the historic drama on Capitol Hill to bail out Wall Street has opened our eyes to the need for oversight and transparency in every area of our economy," Solorio added. "The Governor showed his commitment to oversight and transparency by signing our bill."
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