Washington

Health care reform legislation that the insurance industry cansupport took a giant step forward last week when the U.S. SenateFinance Committee rejected two amendments that would create a"public option" to compete with private carriers.

The industry also won another key victory when the committee'sbill was modified to say specifically that agents would be allowedto sell insurance to individuals and businesses buying coveragethrough the exchanges proposed in the legislation. Specifically,the language says that "exchanges have access to the same industryprofessionals as those working outside the exchange."

Charles Symington, senior vice president of government affairsfor the Independent Insurance Agents and Brokers of America,cautioned that while the IIABA is "very pleased" the Senate panelrejected the two amendments to add a public option, "we remainconcerned that there will be forceful efforts to add it during themerging of the bills and during floor consideration."

He added that IIABA hopes Sen. Max Baucus, D-Mont., who chairsthe Finance Committee, "and the other Democrats who voted 'no' willcontinue to protect the private delivery of health insurance."

Joel Kopperud, a director for government relations with theCouncil of Insurance Agents and Brokers, reacted to the votes bystating "there's no way a government insurance program would fairlycompete with private industry."

He added that "the real debate on the proposed governmentprogram is about a single-payer system and a government programthat would certainly become a black hole for federal funds."

But the industry still has many concerns with the Senate FinanceCommittee bill, which is regarded by analysts and congressionalstaffers as the version most likely to emerge from Congress.

America's Health Insurance Plans wrote a letter to the committeeon Sept. 24 warning that new taxes imposed on insurers through thebill would undermine efforts to control costs with reform.

The letter explained that the "annual fee on health insuranceproviders," expected to generate $6.7 billion, would have theeffect of increasing premiums by roughly 1 percent, citingCongressional Budget Office estimates.

The letter also voices concern about the decision of billwriters to narrow the age band on premium differentials to 4:1. Ifage bands are narrowed too much, the letter said, premiums willrise significantly for individuals under the age of 35–the fastestgrowing segment of the uninsured.

The letter notes that the bill's original age band of 5:1already reflects compression, relative to the natural distributionof underlying health care costs across age groups.

"If age bands are narrowed or compressed too much, premiums willrise significantly for these individuals, making coverageunaffordable, and resulting in a smaller and less stable pool andhigher premiums for everyone," the letter said.

Meanwhile, in the House, where there is stronger support for apublic option, work continued on legislation melding reformmeasures drafted by three separate committees. It was also unclearwhen work on a final House would be completed and a floor votescheduled.