While they may be known as property and casualty insurance agents, commercial intermediaries have no intention of sitting on the sidelines while one of their most lucrative sources of income is threatened by health insurance reform efforts.
That point was made clear by the recent announcement that at least two P&C agent groups will join their life and health insurance counterparts here on July 15 for a briefing on the controversial changes being debated. That will be followed by producer visits to Capitol Hill to engage lawmakers on the potential impact of various reforms on insurance buyers and sellers alike.
Meeting July 15 will be representatives from the Council of Insurance Agents and Brokers and Independent Insurance Agents and Brokers of America. They will be joined by the National Association of Health Underwriters and the National Association of Insurance and Financial Advisors, among other groups.
Collectively, the organizations represent more than 500,000 professional health insurance advisors, agents, brokers, consultants and employee benefit specialists, the groups said.
Clearly, however, P&C agent groups have been ratcheting up their rhetoric on the subject of late, determined not to be bystanders in a debate that could have a huge impact on the bottom lines of their memberships.
Charles Symington, IIABA’s senior vice president for government affairs, said his group recently surveyed the membership, which indicated that health insurance sales constituted 14 percent of the revenues of the typical P&C independent insurance agency.
“That percentage of business can be the difference between profit and loss, especially during a period of economic stress,” he said.
Moreover, he added, health insurance is a key component of employee benefits, which is the fastest growing segment of P&C independent agency revenues–particularly the group health market for small and midsize businesses, he explained.
In addition, “reform could potentially have an impact on the workers’ compensation market, which is a core product for independent agents in the commercial category,” Mr. Symington said.
The stakes are even higher for bigger brokerages and national clients, according to CIAB’s director of government relations, Joel Kopperud, who said his group’s members manage billions of dollars in employee benefit programs.
“A large chunk of that is health care,” he noted. “Our members see employee benefits as a growth business within the mature P&C business.” He said that both for new and existing customers, brokers manage group health, wellness and preventative care programs.
For CIAB’s 270 member firms–many being major regional or national brokers–a significant part of their business involves employee benefits. And while not all of their benefits income is derived from health insurance plans, it does form a major selling point for the marketing of their services, Mr. Wood said.
P&C agents see several potential threats to their business under the legislative proposals being debated, with the biggest concern being a “public plan.” This provision, supported by President Barack Obama as well as most liberals in Congress, would create a health insurance program administered by those who manage Medicare and Medicaid.
The goal of a public plan is to ensure private carriers offer lower rates–an important consideration as Congress seeks to cover up to 47 million uninsured workers without bankrupting the country.
Mr. Wood said that a draft bill from Sen. Edward M. Kennedy, D-Mass., who chairs the Senate Health, Education, Labor and Pensions Committee (also known as the HELP Committee) is a “fast track to a single-payer plan.”
“This is a loaded gun pointed to our heads,” he added.
In a letter last week to members of the HELP Committee, Ken Crerar, president of CIAB, said, “We remain opposed to a government insurance plan.”
“We can achieve the goals of lower costs, expanding coverage and increasing quality without a government plan that would be detrimental to the employer-provided system,” he added.
IIABA’s Mr. Symington said his organization “strongly supports reform of the nation’s health care system, both to deal with the issue of the uninsured as well as to find a solution to the drastic increase in health care costs.”
However, he added, IIABA is “very concerned with Congressional consideration of a government-run plan to unfairly compete with the private market. We believe that if a government-run plan were created, in the long run, such a mechanism would lead to a single-payer system that would harm consumers.”
Mr. Wood also said the Kennedy draft bill would “do great violence to the employer group marketplace,” substantially diminishing the role of agents and brokers while having a negative impact on maintaining private health plans.
Part of the bill, noted Mr. Wood, would eliminate creation of self-insurance health programs for businesses with 250 lives or less, instead putting them into government-backed plans. He said under the Kennedy plan, producers would not be allowed to market the government plans because of a perception of a conflict of interest.
P&C agents also see as a threat the so-called “Navigator plan”–a component of the legislation being drafted by the HELP Committee that would award grants to public and private entities to conduct public education, distribute information and assist with health insurance enrollment. Under the proposal, health insurance issuers–including agents–would be prohibited from participating in the Navigators program.
“This proposal would give federal grants to groups with no background or expertise in health insurance” as well as “the responsibility to advise businesses and individuals regarding their health insurance decisions,” said Kenneth R. Auerbach, president of another P&C agent group–the National Association of Professional Insurance Agents.
“In addition, it would specifically exclude licensed health insurance agents or brokers from participating, which makes no sense at all,” Mr. Auerbach added.
“Consumers already turn to their local professional insurance agents to help them navigate the current maze of health insurance choices,” according to Mr. Auerbach. “There’s no need to recreate that system.”
He said the HELP Committee proposal would “use taxpayer dollars to set up what are, in essence, federal insurance agencies for health coverage in every state, with the proviso that those with health insurance experience be barred from being involved.”
Mr. Auerbach expressed concern that entities receiving grants to act as health insurance “navigators” could be community groups, labor unions or other organizations with no experience in health insurance, and that might be biased in favor of a government option, with the potential to inappropriately steer people away from opting for private health insurance plans.
Another sticking point in the reform debate is “community rating,” which agents and brokers fear would undermine the effectiveness of wellness and preventative care programs many administer.
Meanwhile, the IIABA is voicing concern about an “employer mandate” provision, forcing firms to provide insurance or pay a fee to finance alternative coverage.
“An unreasonable employer mandate could hamstring small business during this difficult economic time and potentially lead to the loss of hundreds of thousands of jobs,” warned IIABA’s Mr. Symington.
When agents visit on July 15, negotiations are likely to be white-hot, as the House and the Senate are apparently on a collision course–likely to pass different versions of health care reform legislation before they leave for the summer recess in early August.
It is unclear when the House will draft a comprehensive plan, especially since the current proposals that three House committees have on the table do not contain any provisions designed to pay for the expanded coverage.
The HELP Committee had hoped to finish its bill by June 19, but Senate Finance Committee members and the Senate Democratic leadership now say they don’t plan to complete work on a comprehensive bill until mid-July.
Passage of conflicting bills in the House and Senate would require congressional staffs to spend August preparing papers outlining the differences in the legislation, setting the stage for intensive final talks in September and October, and leading to a bill on the president’s desk by year-end.
“We are optimistic that health care reform legislation will ultimately pass,” CIAB’s Mr. Kopperud said last week. “But its shape remains unclear, and we want to be players in drafting this legislation. We want the voice of the agent to be heard and for the producer community to play a strong ongoing role in providing health care to the workforce under a reformed health care delivery system.”
President Obama last week launched a nationwide multimedia effort to reignite momentum for action on health care reform, including press conferences and grass-roots meetings throughout the country. In his appearances, he is making clear he remains flexible on the provisions he would accept in a final bill.
Specifically, he said at a press conference last week that he will not insist that a public plan be included in any health care reform legislation he signs.
“We have not drawn lines in the sand, other than that reform has to control costs and that it has to provide relief to people who don’t have health insurance or are underinsured,” President Obama said in a response to a question at his news conference. “You know, those are the broad parameters that we’ve discussed.”
However, he also sent a loud message to the medical industry that one of the ways health care reform legislation will be paid for is via cuts in the Medicare Advantage program.