Court hearings are occuring again in regard to the Affordable Care Act state lawsuits in front of a Virginia Appeals Court panel and are centering on the Affordable Care Act's individual health insurance purchasing mandate.

A 3-judge panel from the 4th U.S. Circuit Court of Appeals was hearing oral arguments in Richmond, Va., in two major PPACA individual mandate cases - Liberty University vs. Geithner and Virginia vs. Sebelius, according to reports by National Underwriter.

The key provision in the lawsuits is the Inidvidual mandate. Supporters of the PPACA individual health insurance ownership mandate provision say the U.S. Constitution commerce clause gives Congress the authority to regulate commercial activity.

Those arguing that the mandate is unconstitutional argue that the provision gives Congress the ability to regulate commercial activity but not the authority to regulate inactivity.

The Affordable Care Act, if reaffirmed by the courts, will require most U.S. taxpayers with incomes over a minimum level to possess/purchase a minimum level of health coverage or else face a penalty.

Tha Anti-Mandate Argument

According to National Underwriter, Matthew Staver, a lawyer for Liberty University, told the court that a citizen who goes without health insurance has chosen not to engage in economic activity and cannott be forced to take part in the market with a government mandate. "Commerce cannot be idleness, Staver argued."

The Pro-Mandate Argument

The Obama administration, argued that an individual who goes without insurance nevertheless takes part in the vast health care market, when he or she sickens or is injured and shows up for medical care, the National Underwriter reported.

Uncompensated care costs the country $49 billion per year and raises the average family's annual health care premium by $1,000, the administration noted.

Health care is "an almost universal factor of our existence," Katyal said. "One cannot opt out of it on an individual basis, according to the administration's attorney."

The mandate is expected to undergo another test in June, when a panel from the 11th U.S. Circuit Court of Appeals will consider a case that was brought by 26 states.

As I've noted earlier in previous blog posts, this will ultimately be decided down the road by the U.S. Supreme Court.

The Mississippi River is threatening communities along its entire stretch with floods as it crests tonight in Memphis and could flood from Iowa to New Orleans.

With heavy rains in the region in April that spawned devastating tornados and left hundreds dead and a billion in more in property damage, the area is saturated and vulnerable to floods.

More Disaster Related Resources:

• Flood insurance coverage
• How to Assist Clients with Damage Claims
• Tornado damage coverage

Congress has been grappling with flood insurance reform for years and years. There is a reform package that has preliminary approval from its oversight comittee.

According to Reuters major U.S. insurers were battling on Capitol Hill this week over control of 800,000 former State Farm flood insurance policies while lawmakers consier reform options for the flood insurance system.

The conflict began last year when State Farm dropped out of the government's flood insurance program, leaving behind 800,000 existing policies. State Farm had held almost 15 percent of the $3.3-billion flood insurance market.

Competitors of State Farm want to be able to take over the policies, but State Farm has an arrangement with the government that shields them. Congress will have to decide what to do.

The struggle over the policies pits State Farm against Fidelity National, Allstate, The Hartford , Travelers and other insurance giants in a struggle that is chiefly about access to policy-holders.

Reform legislation is in the works. It has been approved by a U.S. House of Representatives subcommittee, but it faces obstacles, such as the fight over the policies.

Flood insurance is not a highly profitable segment of the insurance business, but people who buy it may be willing to bundle in their home, auto and other more lucrative insurance lines so this battle is not just over foold coverage.

The NFIP covers more than 5.6 million property owners against floods, the most common of U.S. natural disasters. Typical home insurance policies do not cover flood damage.

The NFIP has been in trouble since 2005, when it was inundated with claims from Hurricane Katrina. A $17.8-billion taxpayer bailout of the program followed, as did a series of investigations, studies and congressional hearings.

State Farm, once the nation's No. 2 writer of flood insurance, left the program in June 2010, citing its "stop/start" uncertainties. It was the largest pull-out in the program's 42-year history. Faced with 800,000 stranded policies, FEMA decided to put them in its NFIP Direct operation, instead of letting other insurers take them over.

FEMA's move, implemented over a one-year transition, minimized confusion for policy-holders and preserved a role for independent State Farm agents in selling flood policies. However, the tactic protected State Farm from competitors, while vastly expanding NFIP Direct, well beyond its original purpose, according to insurers who now want a change.

Was this government overreach, or effective protection of a risky market?

According to a survey conducted earlier this year by the National Association of Insurance and Financial Advisors (NAIFA), about 75% of the agents and brokers surveyed said their health insurance commissions have fallen since Jan. 1.

The report findings, published by National Underwriter found that "13% of the 520 survey participants said health insurers have informed them that commissions will be cut in the next year".

Further, roughly 11% of the survey participants said they have stopped selling and servicing policies for individuals, and 4% said they have gotten out of the health insurance market altogether.

53% of the survey participants said their commissions have been lowered by 25% or more. and a staggering 17% of the participants said the carriers they work with have cut commissions by 50% or more.

NAIFA told National Underwriter that it organized the survey in response to reports that the new minimum medical loss ratio (MLR) requirements in the federal Patient Protection and Affordable Care Act of 2010 (PPACA) have hurt commission rates.

The New MLR Rule

The PPACA MLR provisions require health insurers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts. The MLR requirements took effect Jan. 1.

Nearly across the board, health insurers have informed agents and brokers that they are cutting commissions in an effort to meet the MLR requirements.

What has been your experience with commissions so far this year, what have insurers told you?

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