Washington

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While they may be known as property and casualty insuranceagents, commercial intermediaries have no intention of sitting onthe sidelines while one of their most lucrative sources of incomeis threatened by health insurance reform efforts.

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That point was made clear by the recent announcement that atleast two P&C agent groups will join their life and healthinsurance counterparts here on July 15 for a briefing on thecontroversial changes being debated. That will be followed byproducer visits to Capitol Hill to engage lawmakers on thepotential impact of various reforms on insurance buyers and sellersalike.

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Meeting July 15 will be representatives from the Council ofInsurance Agents and Brokers and Independent Insurance Agents andBrokers of America. They will be joined by the National Associationof Health Underwriters and the National Association of Insuranceand Financial Advisors, among other groups.

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Collectively, the organizations represent more than 500,000professional health insurance advisors, agents, brokers,consultants and employee benefit specialists, the groups said.

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Clearly, however, P&C agent groups have been ratcheting uptheir rhetoric on the subject of late, determined not to bebystanders in a debate that could have a huge impact on the bottomlines of their memberships.

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Charles Symington, IIABA's senior vice president for governmentaffairs, said his group recently surveyed the membership, whichindicated that health insurance sales constituted 14 percent of therevenues of the typical P&C independent insurance agency.

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“That percentage of business can be the difference betweenprofit and loss, especially during a period of economic stress,” hesaid.

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Moreover, he added, health insurance is a key component ofemployee benefits, which is the fastest growing segment of P&Cindependent agency revenues–particularly the group health marketfor small and midsize businesses, he explained.

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In addition, “reform could potentially have an impact on theworkers' compensation market, which is a core product forindependent agents in the commercial category,” Mr. Symingtonsaid.

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The stakes are even higher for bigger brokerages and nationalclients, according to CIAB's director of government relations, JoelKopperud, who said his group's members manage billions of dollarsin employee benefit programs.

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“A large chunk of that is health care,” he noted. “Our memberssee employee benefits as a growth business within the matureP&C business.” He said that both for new and existingcustomers, brokers manage group health, wellness and preventativecare programs.

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For CIAB's 270 member firms–many being major regional ornational brokers–a significant part of their business involvesemployee benefits. And while not all of their benefits income isderived from health insurance plans, it does form a major sellingpoint for the marketing of their services, Mr. Wood said.

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P&C agents see several potential threats to their businessunder the legislative proposals being debated, with the biggestconcern being a “public plan.” This provision, supported byPresident Barack Obama as well as most liberals in Congress, wouldcreate a health insurance program administered by those who manageMedicare and Medicaid.

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The goal of a public plan is to ensure private carriers offerlower rates–an important consideration as Congress seeks to coverup to 47 million uninsured workers without bankrupting thecountry.

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Mr. Wood said that a draft bill from Sen. Edward M. Kennedy,D-Mass., who chairs the Senate Health, Education, Labor andPensions Committee (also known as the HELP Committee) is a “fasttrack to a single-payer plan.”

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“This is a loaded gun pointed to our heads,” he added.

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In a letter last week to members of the HELP Committee, KenCrerar, president of CIAB, said, “We remain opposed to a governmentinsurance plan.”

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“We can achieve the goals of lower costs, expanding coverage andincreasing quality without a government plan that would bedetrimental to the employer-provided system,” he added.

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IIABA's Mr. Symington said his organization “strongly supportsreform of the nation's health care system, both to deal with theissue of the uninsured as well as to find a solution to the drasticincrease in health care costs.”

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However, he added, IIABA is “very concerned with Congressionalconsideration of a government-run plan to unfairly compete with theprivate market. We believe that if a government-run plan werecreated, in the long run, such a mechanism would lead to asingle-payer system that would harm consumers.”

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Mr. Wood also said the Kennedy draft bill would “do greatviolence to the employer group marketplace,” substantiallydiminishing the role of agents and brokers while having a negativeimpact on maintaining private health plans.

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Part of the bill, noted Mr. Wood, would eliminate creation ofself-insurance health programs for businesses with 250 lives orless, instead putting them into government-backed plans. He saidunder the Kennedy plan, producers would not be allowed to marketthe government plans because of a perception of a conflict ofinterest.

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P&C agents also see as a threat the so-called “Navigatorplan”–a component of the legislation being drafted by the HELPCommittee that would award grants to public and private entities toconduct public education, distribute information and assist withhealth insurance enrollment. Under the proposal, health insuranceissuers–including agents–would be prohibited from participating inthe Navigators program.

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“This proposal would give federal grants to groups with nobackground or expertise in health insurance” as well as “theresponsibility to advise businesses and individuals regarding theirhealth insurance decisions,” said Kenneth R. Auerbach, president ofanother P&C agent group–the National Association ofProfessional Insurance Agents.

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“In addition, it would specifically exclude licensed healthinsurance agents or brokers from participating, which makes nosense at all,” Mr. Auerbach added.

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“Consumers already turn to their local professional insuranceagents to help them navigate the current maze of health insurancechoices,” according to Mr. Auerbach. “There's no need to recreatethat system.”

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He said the HELP Committee proposal would “use taxpayer dollarsto set up what are, in essence, federal insurance agencies forhealth coverage in every state, with the proviso that those withhealth insurance experience be barred from being involved.”

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Mr. Auerbach expressed concern that entities receiving grants toact as health insurance “navigators” could be community groups,labor unions or other organizations with no experience in healthinsurance, and that might be biased in favor of a governmentoption, with the potential to inappropriately steer people awayfrom opting for private health insurance plans.

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Another sticking point in the reform debate is “communityrating,” which agents and brokers fear would undermine theeffectiveness of wellness and preventative care programs manyadminister.

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Meanwhile, the IIABA is voicing concern about an “employermandate” provision, forcing firms to provide insurance or pay a feeto finance alternative coverage.

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“An unreasonable employer mandate could hamstring small businessduring this difficult economic time and potentially lead to theloss of hundreds of thousands of jobs,” warned IIABA's Mr.Symington.

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When agents visit on July 15, negotiations are likely to bewhite-hot, as the House and the Senate are apparently on acollision course–likely to pass different versions of health carereform legislation before they leave for the summer recess in earlyAugust.

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It is unclear when the House will draft a comprehensive plan,especially since the current proposals that three House committeeshave on the table do not contain any provisions designed to pay forthe expanded coverage.

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The HELP Committee had hoped to finish its bill by June 19, butSenate Finance Committee members and the Senate Democraticleadership now say they don't plan to complete work on acomprehensive bill until mid-July.

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Passage of conflicting bills in the House and Senate wouldrequire congressional staffs to spend August preparing papersoutlining the differences in the legislation, setting the stage forintensive final talks in September and October, and leading to abill on the president's desk by year-end.

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“We are optimistic that health care reform legislation willultimately pass,” CIAB's Mr. Kopperud said last week. “But itsshape remains unclear, and we want to be players in drafting thislegislation. We want the voice of the agent to be heard and for theproducer community to play a strong ongoing role in providinghealth care to the workforce under a reformed health care deliverysystem.”

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President Obama last week launched a nationwide multimediaeffort to reignite momentum for action on health care reform,including press conferences and grass-roots meetings throughout thecountry. In his appearances, he is making clear he remains flexibleon the provisions he would accept in a final bill.

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Specifically, he said at a press conference last week that hewill not insist that a public plan be included in any health carereform legislation he signs.

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“We have not drawn lines in the sand, other than that reform hasto control costs and that it has to provide relief to people whodon't have health insurance or are underinsured,” President Obamasaid in a response to a question at his news conference. “You know,those are the broad parameters that we've discussed.”

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However, he also sent a loud message to the medical industrythat one of the ways health care reform legislation will be paidfor is via cuts in the Medicare Advantage program.

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