Filed Under:Agent Broker, E&S/Specialty Business

Uniting a divided Congress around insurance industry issues

Lawmakers quietly finding agreement on enacting the PACE bill and repealing the 'Cadillac tax'

If you pay attention to most media reports, you might conclude that Washington, D.C., is in the grip of gridlock that's only getting worse. There is plenty of evidence to support this perception.

The divisiveness and acrimony on Capitol Hill increased to the point that John Boehner resigned both his speakership and his congressional seat in utter frustration.

Sounds like nothing's getting done, right?

Not quite. While lawmakers fight about issues such as funding for Planned Parenthood, they are quietly finding agreement on — of all things — insurance.

A series of wins
In the hyper-partisan atmosphere of our nation's capital, insurance legislation is drawing bipartisan support.

One example: Under the Affordable Care Act, the federal government was going to change the definition of a small group market in health insurance by raising it from 50 or fewer to 100 or fewer. This would have raised costs for many small businesses that provide their employees with health insurance.

A bipartisan bill, the Protecting Affordable Coverage for Employers (PACE), was introduced that enables the states as the regulators of insurance to keep the current definition of a small group market in health insurance at 50 or fewer employees. First the House passed it, unanimously. Then the Senate passed it, by voice vote. So much for gridlock.

There is another issue that has attracted broad support: repeal of the so-called “Cadillac tax.” The tax, enacted as part of the Affordable Care Act, applies to fully insured and self-funded employer health plans on expenditures that exceed annual limits of $10,200 for individual coverage and $27,500 for family coverage.

This tax is particularly odious, for reasons far too numerous to recount here. It is based on the false assumption that people who have good health insurance coverage are personally responsible for others not having it. It attempts to ration health care by taking coverage away from some in order to provide it to others. It is the legislative equivalent of Robin Hood.

The Cadillac tax is a time bomb set to explode in 2018 that would begin to dismantle private sector health insurance. It is a poison pill that threatens to divert money away from the private sector into expanding the government's health care system.

Bipartisan coalitions
At first, opposition to the Cadillac tax came from the sources you might expect: advocates for business, Republicans, those of us in the insurance industry, anti-tax organizations and staunch opponents of Obamacare.

But then something interesting happened: Broad-based, bipartisan coalitions began to form. Labor unions, having negotiated good health coverage for their members in lieu of raises, joined in opposition to the tax. So did nonunion employees with good coverage and chronic medical conditions for which they might be forced to pay thousands of dollars more, or lose affordable coverage altogether.

The Kaiser Family Foundation, which does nonpartisan health care analysis, reports that a recent poll it conducted finds that 60% of the public opposes the tax, while 28% favors it.

Once the public makes up its collective mind about something, its political leaders are quick to follow. Democratic presidential candidates Hillary Rodham Clinton and Bernie Sanders have both joined the fight against the tax. In late September, House Ways and Means Chairman Paul Ryan (R-Wis.) included repeal in a broad package that passed out of committee. Senate Finance Committee Chairman Orrin Hatch (R-Utah) even went so far as saying that the repeal wouldn't necessarily need a budget offset of the nearly $90 billion hole it would create during 10 years. This support means the tax's days are numbered.

Such unexpected agreement on insurance issues has been happening for a while. A five-year farm bill, which includes the Federal Crop Insurance Program, was signed into law in 2014. In January of this year, Congress voted overwhelmingly to renew the Terrorism Risk Insurance Act and created the National Association of Registered Agents and Brokers. In 2012, Congress passed a five-year reauthorization of the National Flood Insurance Program; the vote in the House was 373–52, while the Senate passed it 74–19. Two years later, Congress amended the flood bill to moderate some rate increases, again by overwhelming votes.

Our value proposition
What's at work here? Why have insurance issues moved smoothly through Congress and been enacted into law with bipartisan support, when the same lawmakers are at loggerheads on a host of hot-button issues?

There are two reasons. First, lobbyists for the insurance industry and specifically the National Association of Professional Insurance Agents have done an excellent job making their cases to lawmakers. And they do it the old-fashioned way — through honest persuasion, and by pointing out all of the advantages of the proposals they advocate.

As an industry, we have done a good job at convincing people of our value proposition. Americans like what insurance does for them. People keep buying insurance because it is vital for them to protect the most important things in their lives. Consumers know that insurance is a contract to protect people and their property, and a promise to be made whole in the event of a loss. They can ensure that their lives can be made whole by contacting their local professional independent agent and purchasing insurance to cover potential losses.

Beyond that, the insurance industry protects the U.S. economy. Without insurance, private-sector businesses and public sector enterprises would grind to a halt. According to the I.I.I., insurers contributed $413 billion — 2.5% of the nation's gross domestic product — in 2012.

Our industry is regulated prudently by the states, not imprudently by the federal government. That's one reason our industry remained strong and stable through both the Great Depression of the 1930s and the Great Recession of 2007–2009.

Congress often hears from supporters and opponents on controversial issues. But although there are differing opinions on our issues, no one ever argues that insurance should be abolished. It's too important — and the American people know it.

Ted Besesparis is senior vice president of the National Association of Professional Insurance Agents in Alexandria, Va.

 

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