Agents Wary Of Public Option Despite Senate Committee Vote

Washington

Health care reform legislation that the insurance industry can support took a giant step forward last week when the U.S. Senate Finance Committee rejected two amendments that would create a "public option" to compete with private carriers.

The industry also won another key victory when the committee's bill was modified to say specifically that agents would be allowed to sell insurance to individuals and businesses buying coverage through the exchanges proposed in the legislation. Specifically, the language says that "exchanges have access to the same industry professionals as those working outside the exchange."

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, cautioned that while the IIABA is "very pleased" the Senate panel rejected the two amendments to add a public option, "we remain concerned that there will be forceful efforts to add it during the merging of the bills and during floor consideration."

He added that IIABA hopes Sen. Max Baucus, D-Mont., who chairs the Finance Committee, "and the other Democrats who voted 'no' will continue to protect the private delivery of health insurance."

Joel Kopperud, a director for government relations with the Council of Insurance Agents and Brokers, reacted to the votes by stating "there's no way a government insurance program would fairly compete with private industry."

He added that "the real debate on the proposed government program is about a single-payer system and a government program that would certainly become a black hole for federal funds."

But the industry still has many concerns with the Senate Finance Committee bill, which is regarded by analysts and congressional staffers as the version most likely to emerge from Congress.

America's Health Insurance Plans wrote a letter to the committee on Sept. 24 warning that new taxes imposed on insurers through the bill would undermine efforts to control costs with reform.

The letter explained that the "annual fee on health insurance providers," expected to generate $6.7 billion, would have the effect of increasing premiums by roughly 1 percent, citing Congressional Budget Office estimates.

The letter also voices concern about the decision of bill writers to narrow the age band on premium differentials to 4:1. If age bands are narrowed too much, the letter said, premiums will rise significantly for individuals under the age of 35–the fastest growing segment of the uninsured.

The letter notes that the bill's original age band of 5:1 already reflects compression, relative to the natural distribution of underlying health care costs across age groups.

"If age bands are narrowed or compressed too much, premiums will rise significantly for these individuals, making coverage unaffordable, and resulting in a smaller and less stable pool and higher premiums for everyone," the letter said.

Meanwhile, in the House, where there is stronger support for a public option, work continued on legislation melding reform measures drafted by three separate committees. It was also unclear when work on a final House would be completed and a floor vote scheduled.