NU Online News Service

WASHINGTON--Insurance agents are voicing dismay over healthcare reform legislation passed by the House late Saturday, and are hopeful that a more acceptable product can be produced by the Senate.

H.R. 3962, the Affordable Healthcare for America Act, was approved in the House by a 220-215 vote, just before midnight Saturday. Action on the measure in the Senate is next.

According to Beth Mantz-Steindecker, a healthcare analyst at Washington Analysis, Sen. Harry Reid, D-Nev., the Senate majority leader, may unveil the Democrats' Senate healthcare bill with a Congressional Budget Office score this week.

That would mean, she said, that the earliest it could reach the floor would be next week, as the Senate adjourns for the week on Wednesday for Veterans Day.

Ms. Mantz-Steindecker predicted that the Senate would need a minimum of two weeks for debate. With the Thanksgiving recess (November 23-27), that means the earliest passage in the Senate would occur is the week of Dec. 7. That would give conferees a mere two weeks to pass the bill before the winter recess.

"Given that we don't know when Reid will drop his bill, and Republicans are promising to slow down the floor debate with amendments, a more likely scenario is that the Senate passes a bill by the end of the year, and the final bill is enacted next year before the State of the Union, which usually occurs in late January," she said.

Robert Rusbuldt, president and chief executive officer of the Independent Insurance Agents and Brokers of America, said, "As the Senate and House move to conference, the IIABA urges Congress to reconsider what this bill will do to consumers and small businesses."

Among the provisions the industry is concerned with is one that would create a public option for government-provided insurance that IIABA officials contend "would unfairly compete with the private insurance marketplace, limit consumer choice and increase the taxpayer burden."

"This bill picks winners and losers, and small businesses and healthcare consumers are the biggest losers today," said Charles Symington, IIABA senior vice president of government affairs.

Other concerns include a provision that imposes a 5.4 percent surtax on small businesses that file income tax returns as individuals, and another that creates a new Small Business Administration grant program that would award federal money to nonprofits for the purpose of providing small businesses (those with less than 100 employees) assistance with consumer information, outreach, counseling and enrollment.

And the National Association of Insurance and Financial Advisors is voicing concern that a provision repealing the McCarran-Ferguson Act antitrust exemption for health and medical malpractice insurers would expand the Federal Trade Commission's authority to oversee all lines of insurance.

The provision was modified last week with an amendment to the bill to strengthen the mandate for the FTC to study potential anti-competitive practices by health and medical malpractice insurers.

This is of particular concern to the property and casualty industry. Currently, the FTC is conducting a study of the fairness of credit scoring practices used by the industry to price personal lines policies.

The FTC has been barred since the early 1980s from regulating the insurance industry but, under pressure from House Democrats, launched a study in early January on how credit scoring data is used to set premium rates. Carriers representing 60 percent of the industry's premiums submitted their data to the agency in April.

"This bill risks completely derailing employer-provided benefits," commented Joel Kopperud, a director of government relations for the Council of Insurance Agents and Brokers.

Specifically, he said, "It creates a government program that would not compete fairly and could acquire nearly 120 million Americans that could otherwise balance private risk pools."

He added, "It limits premium variations so much that healthy behavior could not be rewarded with lower premiums."

And, he said, "the resulting spike in costs may be enough to incline employers to pay a penalty rather than continue offering benefits."

The self-insurance industry also weighed in on the House healthcare bill. Michael Ferguson, chief operating officer of the Self-Insurance Institute of America, cited a number of concerns.

Specifically, he pointed out that one provision would levy a tax on all employer-sponsored health plans to fund a Research Board proposed to determine the effectiveness of medical treatments, and a study proposed in the legislation would seek to determine "the extent to which rating rules are likely...to encourage small and midsize employers to self-insure."

The House bill would create a new government-regulated insurance "exchange" where private companies would sell policies in competition with the government.

The bill adds a new provision that would add incentives for the creation of additional state-based nonprofit "cooperatives."

But it contains a provision that assures insurance agents' ability to continue to offer all products sold in the "exchange" environment.

Both the House and Senate bills gradually would extend coverage to nearly all Americans by providing government subsidies to help pay premiums.

The measures would bar insurer practices such as charging more to those in poor health or denying them coverage altogether.

Under both bills, all Americans would be required to carry health insurance, either through an employer, a government plan, or by purchasing it on their own.

To reduce costs, the government subsidies and consumer protections don't take effect until 2013. During the three-year transition, both bills would provide $5 billion in federal dollars to help get coverage for people with medical problems who are turned down by private insurers.

Both the House and Senate bills would expand significantly the federal-state Medicaid health program for low-income people.

There are several major differences between the bills.

Specifically, the House bill would require employers to provide coverage; the Senate does not.

Another difference is that the House bill would pay for the coverage expansion by raising taxes on upper-income earners; the Senate uses a variety of taxes and fees, including a levy on high-cost insurance plans.

Another major difference is cost. The House bill would cost about $1.2 trillion over 10 years; the cost of the Senate version is under $900 billion.

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