Kennedy's Death Just One Factor Making Health Care Compromise More Difficult

Washington

Strong voter push-back over controversial health care reform proposals, cost concerns and the political vacuum left by the death of Sen. Edward Kennedy are likely to prompt Congress this fall to ultimately pass more moderate, "reform-lite" legislation, industry lobbyists and analysts predict.

The issue is of critical importance to property and casualty agencies and national brokerages, as many commercial coverage intermediaries derive a substantial portion of their income from group health plan sales.

Indeed, Joel Wood, senior vice president of government affairs at the Council of Insurance Agents and Brokers, said that "anxiety over health reform dwarfs other issues to our members." Specifically, he said that from "the conversations I've had with our executives, business decisions are being forestalled until they get a clear sense of how the legislation will turn out."

Whether and when Congress will be able to pass legislation reshaping the health care delivery system is the dominant question as legislators return to work this week.

Besides the continued role of agents in delivering health insurance, its cost, the timing of legislation, its impact on small business, and whether reform will include a public option and employer mandates are just some of the critical issues to be decided after a congressional recess marked by contentious town hall meetings on reform.

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, said September is "going to be pivotal, and will very likely determine the ultimate fate of health care reform legislation this year."

He said IIABA members and staff are working around the clock to send a loud message to Congress about the important role of agents and brokers in the sale and delivery of health insurance. "We are leaving no stones unturned," he added.

The odds that a comprehensive reform bill will pass are less certain now that Sen. Kennedy–the iconic liberal Democrat from Massachusetts who championed universal health care for his 46-year Senate career–will not be around to help bridge the divide between polarized Democrats and Republicans.

"What he brought to the table was the ability to make compromises and get Democrats in his caucus to go along with it," said Janet Trautwein, chief executive officer at the National Association of Health Underwriters. "They may not have liked it, but they'd do it."

NAHU's concern, she added, is that "the passing of Sen. Kennedy may encourage some to act quickly in a very partisan fashion." Since Democrats lack the 60 Senate votes needed to proceed without threat of a filibuster, she warned that "the Democrats' continued reference to going a partisan reconciliation process route is likely to hinder efforts at consensus."

In a note to investors, analysts at Washington Analysis, which advises stock brokerages and hedge funds, said they don't believe Sen. Kennedy's death will move the ultimate bill to the left–that is, toward adoption of the public option.

"The polls, town hall outcry, 10-year deficit numbers and recent statements argue for a more moderate direction or a more modest direction," the analysts said.

More "moderate" moves would include taking cost containment "baby steps" even while possibly expanding Medicaid to cover more of the uninsured, said analyst Beth Mantz-Steindecker. "Such a Plan B amounts to basically doing little overhaul, but the Democrats are likely to advertise such a bill as the 'next installment of health care reform,'" the analysts said.

Officials of the National Association of Professional Insurance Agents also predicted that some reform bill will pass in Congress and be signed into law.

With President Barack Obama declaring health care reform his "top priority" and having "wagered his credibility and that of his still-young administration on being able to say he accomplished his goals," according to PIA President Kenneth Auerbach, "looking for a victory, the White House is likely to strike some sort of deal."

Ms. Trautwein agreed that the "fiery town hall meetings over August, dwindling public approval over the shape of health reform and the new larger projected budget deficit numbers released Aug. 25 signal that members of Congress are likely to return to Washington and reevaluate the health reform proposals currently on the table."

She said it is likely that the House will pass a bill with some form of government-run insurance plan because of the size of the Democratic majority and the fact Democrats just need 218 votes to get a bill through.

However, the "jury is still out" as to whether the Senate Finance Committee will meet its self-imposed deadline of Sept. 15 to produce a bipartisan bill, according to Ms. Trautwein. Besides the public option, there are "many other sticking points" to address, she said. Specifically, these include:

o An employer mandate strongly opposed by the business community.

o Significant Medicare cuts over the next decade that provider groups are fighting.

o The contours of any proposed health insurance purchasing "exchange."

o The details and potential cost-impact of many of the proposed health insurance market reforms.

"The agent/broker community shares many of these concerns, and continues to press for preserving access to the valuable services of our professional community," Ms. Trautwein noted.

The IIABA said its membership "comes to the health insurance debate from two unique perspectives."

"As small business people we know all too well about the financial strain America's small businesses are facing with rising health insurance costs, and as insurance advisers we know firsthand about the inequalities present in the current system," the group said.

The IIABA added that "there is no doubt that our health care system is in need of reform, but the current proposals under consideration in Congress are simply the wrong prescription. We have seen how a government-run insurance plan operates, and it doesn't make much sense to use Medicare, which is set to go bankrupt in 2017, as a blueprint for health care reform legislation."

IIABA said it "hopes Congress begins working on bipartisan legislation that institutes common sense private market reforms."