Now that the healthcare reform bill with of its final changeshas been signed into law, what will its impact be on professionalinsurance agents and their customers?

As with anything this new and complex–and because many of thedetails of how changes will be implemented remain to be workedout–it is too early to definitively answer the question, “What doesit mean?” In addition, things may change.

Read an AA&B Web exclusive: “The new healthcare law: What itmeans for agents and brokers?”

When considering the impact of the new law, bear in mind that itis being challenged in court on constitutional grounds by, as ofthis writing, 19 state attorneys general. In addition, keyRepublicans say their party will run in the 2010 elections with apledge to repeal the law.

How likely is it that a court challenge would be successful? Theodds seem against it, but when it comes to trying to figure outwhat the courts will do, there's no way to make an accurateprediction.

How likely is it that the Republicans will win enough seats inthe House or the Senate to succeed in passing a repeal bill? Again,predicting election results is a risky business. But here'ssomething to consider: Even if the GOP were to seize control ofboth chambers of Congress, it would not likely be by veto-proofmargins, and any repeal bill could be vetoed by President Obama.Also, in a Republican-controlled Senate, the filibuster shoe wouldbe back on the other foot: Republicans would need 60 votes to passmost bills.

So as it stands now, the healthcare reform bill is the law ofthe land, until something is determined otherwise by either thejudicial branch or the legislative branch. In the meantime, thechanges that the new law mandates have already begun.

Read a March feature “What will healthcare reform do to independentagencies?”

Implementation
The Dept. of Health andHuman Services (HHS) is spearheading the implementation process andthe writing of regulations on the federal level. Because theinsurance exchanges to be created in 2014 will be state-based, andbecause state-based regulations concerning health insurance havenot been repealed (although some may be superseded by new federalrequirements), state departments of insurance will remain involvedin the regulatory process. In addition, the National Assn. ofInsurance Commissioners (NAIC) has certain responsibilitiesspecified under the new law.

States will be at the center of many of the changes. The levelof changes that consumers will see depends on a large extent ontheir state's engagement–or more specifically, the nature of stateengagement. Some states are challenging the new healthcare law onconstitutional grounds. But others are not doing so, and are movingspeedily to get on board. This places some state insuranceregulators–especially those in states challenging the new law–inthe delicate position of taking steps to implement a federal lawthat their state leaders oppose.

In a recent interview, Kansas Insurance Commissioner SandyPraeger, chair of the NAIC Health Insurance and Managed CareCommittee, said despite the threat of lawsuits, insuranceregulators will start implementing reforms where they are requiredto do so.

Meanwhile, back in Congress, what may be the firstpost-healthcare bill was introduced. The final legislativeenactment did not include a provision for rate regulation. Now,Sen. Diane Feinstein (D-Calif.) has introduced a bill that wouldgive the HHS secretary the power to review premiums and block “anyrate increase found to be unreasonable.” Under her bill, thefederal government could regulate rates in states where stateofficials did not have “sufficient authority and capability” to doso.

The reason for the Feinstein bill? Michael T. McRaith, directorof the Illinois Dept. of Insurance, told legislators April 20,“There is a distinct possibility that less responsible companieswill raise rates to price out people who are sick or might becomesick between now and 2014.” McRaith said he and Illinois Gov. PatQuinn “unequivocally support state-based insurance regulation,”because local officials comprehend local markets. McRaith endorsedSen. Feinstein's bill, saying it would “provide an impetus” forstates to regulate premiums if they did not already do so.

Coping with the new law
Now that the newfederal healthcare reform law has been enacted, professionalinsurance agents are beginning the process of coping with thechanges. What makes this difficult is that while some changes willoccur soon, others won't happen for years, but insureds havequestions now–some of which may have no answers yet.

Many specifics about what will happen in the health insurancemarket won't be known until specific regulations are written. Thiscan put agents in a difficult position when they get questions fromtheir clients. The best approach may be to focus on what is knownnow, while providing information on what may change down theroad.

An approach that is not really a viable option is to assume thatthe new law will be repealed or declared unconstitutional. Whileeither could happen, providing advice to clients based uponassumptions is not prudent. Clients and their agents need to dealwith what is happening, not what might happen but cannot
be predicted.

“As a practical matter–like it or not–as of now, health carereform is the law of the land, and we must deal with that realityin a way that protects the business interests of independentagents,” said PIA National Executive Vice President & CEOLeonard C. Brevik, noting that since the health care law wasenacted, “the action has focused on two tracks–the politics and thepractical.”

“Any time massive changes such as this are attempted by thefederal government, three things are certain: it will cost morethan initial estimates, it will take far longer than anticipated toimplement and there will be unintended consequences,” Brevik said.“It is our job to figure out what those consequences will be andwork to protect the interests of professional insuranceagents.”

It should be noted that private-sector insurance agents willcontinue to be able to sell health insurance policies under the newsystem. A new provision was included that guarantees licensedagents can participate.

Unintended consequences
We already arebeginning to see some unintended consequences of the new law.Because the debate went on for more than a year, the public is verymuch aware of it. But public awareness of the specifics of the lawis less clear.

Enter scam artists, looking to take advantage of the situation.Several states are reporting that individuals posing as insuranceagents or as representatives of the federal government sellingbogus insurance policies under the new healthcare reforms.

HHS Secretary Kathleen Sebelius has sent letters to stateinsurance regulators and prosecutors about the new schemes. Shewarned consumers to beware of deceptive policies that are timelimited, offer limited benefits or advertise themselves as requiredby health insurance reform.

What's next?
It is still too soon afterthe enactment of healthcare reform legislation to judge its fullimpact. But despite the fears that Congress was going to radicallytransform our healthcare system into one where the federalgovernment owns and runs everything, that didn't happen.

In the end, the healthcare sector was not given over tosocialism, defined as government ownership.

Will there be more regulation? Yes. But despite what some hadfeared, our healthcare system will remain in the privatesector.