By Arthur D. Postal, Washington bureau chief,National Underwriter P&C

Despite deep divisions within its own ranks and unitedopposition from Republicans, Democrats appeared to be moving closerand closer at year's end to landmark legislation reforming thenation's health care system, with vast implications for insurancesellers and consumers.

The outcome is potentially huge for property-casualty agents, asa growing number depend on the sale of group health coverage–forwhich the market is never soft–for an increasing share of boththeir top-line revenue and bottom-line profits.

Throughout the often acrimonious debate, agents had two goals inmind. The first was retaining the employer-based, private healthinsurance system, and second, preserving their ability to sell alltypes of plans offered under the new regime.

With the Senate debate continuing as this story went to press,industry lobbyists worked feverishly to defeat any amendment torepeal the antitrust exemption accorded to health and medicalmalpractice insurers. Such a provision is included in the billpassed in early November by the House.

The House bill also includes a provision inviting the FederalTrade Commission to conduct studies of potential antitrustactivities of all insurers, including property and casualtycarriers. P&C industry lobbyists are concerned about thecollateral damage such a provision might have on their business, aswell as the potential cost of litigation that could beprompted.

Although prospects for passage have appeared bleak at times,given the division among Democrats and the nearly unanimousopposition of Republicans, Ira Loss, an analyst at WashingtonAnalysis, believes passage of some bill is probably inevitable.

“Democrats have not given up on passage of healthcare reform.They are just too close,” he said. “It is no longer about policy.It is about winning.”

He said he believes the Senate, with the urging of the ObamaAdministration, will “cut the necessary deals to neutralize theopposition and secure the needed votes.”

He added that “although there are still several fights to be hadand time is short for the Senate to pass the legislation beforeyear-end, we remain optimistic that the Senate will meet thisgoal.”

Although that didn't happen, a final bill could still benegotiated with the House in the first quarter of 2010.

The most controversial dispute was over a public plan, includedin the House bill.

Senate Democrats put forth a last-ditch compromise, negotiatedby 10 moderate and liberal Democrats, which would allow peoplewithout health insurance who are over 55 to join Medicare, withyounger uninsureds able to secure coverage through the federalemployee insurance plan.

However, the compromise did not have the 60 votes needed toclear a Senate filibuster, and could be dropped to secure passageof the broader reform legislation.

John Greene, vice president of congressional affairs for theNational Association of Health Underwriters, said the compromiseplan was misrepresented and would be hard to administer.

He described the insurance coverage for federalemployees–administered by the federal Office of PersonnelManagement–as an “employer plan with a single entry and exit pointdesigned for a specific pool of individuals, and not solely for thepurpose of gaining insurance coverage.”

He said it was “frustrating” to see reports ignoring thisimportant distinction. “The federal government provides significantassistance with the premium and the rate increases that haveoccurred despite their size,” he said.

Greene said that allowing people to buy into the federal programwould be “an administrative nightmare.” Separating employees of thefederal government from everyone else “will add significantadministrative burdens, and for a purpose not associated withemployment in the government.”

While the compromise was still in play, Joel Kopperud, adirector of government relations for the Council of InsuranceAgents and Brokers, indicated that it might be acceptable to hismembership, who sell a great deal of group health coverage.

“Of course we need to see the details of how this national planwould be administered through state exchanges,” he said. “But onthe surface, we think that this may be something that competesfairly and are very encouraged.”

He added that this latest plan “sounds like it threads theneedle.”

One way or the other, however, it appears agents can rest easythat private health insurance will survive the reform debate insome significant form–at least for the time being.

Originally published in the December 21, 2009, issue ofNational Underwriter P&C

Arthur D. Postal, is the Washington bureau chief at NationalUnderwriter, part of Summit Business Media's P&CMagazine Group, which includes American Agent & Broker