Filed Under:Agent Broker, Coverage Issues

Summer of Uncertainty

From NFIP to Obamacare, insurance’s biggest issues are up in the air

Lawmakers in Washington, D.C., rail against uncertainty. They don’t like not knowing if their bills will pass, whether their party will prevail, or—of primary importance—whether their campaigns for re-election will succeed. 

Summer is the time of year when it can look like Congress is finally on the verge of breaking out of its legislative stasis and accomplishing what benefits their constituents. Hope springs eternal.

Stacking the deck against positive progress is the sharp ideological and political divide that grips Capitol Hill and the entire body politic in 2012, along with 2012 being an election year. 

A few words about the flood insurance program illustrate the dynamic against which insurance issues are being played out. As of press time, we don’t know how the effort to get the Senate to finally pass a long-term reauthorization and reform of the National Flood Insurance Program (NFIP) will fare. If history and the political climate are guides, expect another stop-gap extension. 

Related: Read a previous column by Ted Besesparis "Congress Gets No Respect."

Do you notice a familiarity? Since 2002, there have been 15 short-term extensions of the NFIP. In 2010 alone, NFIP lapsed four separate times and flood insurance could not be purchased for a total of 53 days. During the lapses, real estate deals in which flood insurance was required were delayed.

In an example of rare, broad bipartisan agreement, the House last year passed the Flood Insurance Reform Act of 2011 (H.R. 1309) to extend NFIP for a full 5 years and enact key reforms to put the program on a firm financial footing. The vote was 406-22. A similar bill was reported out favorably by the Senate Banking Committee. On a comprehensive flood bill, this is as close to an agreement that lawmakers have come in many years.

As 2012 wears on, a much bigger shoe is getting ready to drop.

The U.S. Supreme Court, sometime in late June, will issue a ruling or rulings on the 2010 healthcare reform law. There are three plausible scenarios for the court: 

  1. Sustain the law in its entirety
  2. Declare portions, such as the individual mandate, unconstitutional and let the rest of the law stand
  3. Declare the whole law unconstitutional.

The Obama administration and reform law supporters say the court must uphold the law to ensure Congress continues tackling national problems through comprehensive solutions. Opponents say it is a fundamental American concept that the federal government should be restricted in what it can require of its citizens.

Beginning March 26, the court heard 3 days of arguments, which were accompanied by a full-throated cacophony of commentators, pundits and experts breathlessly telling everyone exactly what the court will do, based on nothing but speculation. 

Related: Read the article "Potential Frankenstein" by Ted Besesparis.

Although the 3 days of arguments were conducted in open court, the Supreme Court’s deliberations are not conducted in public. All of the punditry heard from the chattering classes—while it may have been informed, learned, perceptive and quite entertaining—was nothing more than speculation, because no one knows how the court will rule until it rules. Not even the court. Until a decision is reached, there is nothing substantive to analyze. Everybody is just guessing. But then, there’s a lot of air time to fill.

The first hearing focused on whether arguments can even be heard before 2014 when the law takes effect; the March 27 hearing focused on whether Congress has the constitutional power to require Americans to carry health insurance or pay a penalty. Two sessions of arguments on March 28 examined how much of the healthcare law should remain in effect, should the individual mandate be eliminated.

Related: Read Ted Besesparis' article "Comity in Congress?"

The main issue the Court is considering—whether or not the individual mandate is constitutional—is the broadest possible question, because it cuts to whether or not Obamacare itself will be sustained. 

How the court rules will profoundly affect how our nation deals with healthcare for many years to come. That comes with a caveat: Barring a clear ruling one way or the other with a 6-3 vote or greater, the Supreme Court’s decision will be subject to ongoing attempts by those who want to reverse it. The justices may have the final word on this law, but not the final say on this issue.

Broader political trends affect insurance issues. Legislation and legal challenges of great importance to professional independent insurance agents are not immune to larger political forces. Our initiatives can get sidetracked by the deep political divisions on Capitol Hill and within the country as a whole, or postponed until after the next election. That makes constant political engagement by professional independent insurance agents a requirement to foster certainty, especially when everything seems so uncertain.

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