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Ain't Over

It ain’t over ’til it’s over. Healthcare reform now becomes a House-Senate showdown.

By  Joel Wood

Senate Republican Leader Mitch McConnell, R-Ky., on December 19 called the healthcare reform legislation “a legislative train wreck of historic proportions.” Maybe he’s right, but at least we managed to jump off the train just before any collision. We may have sustained some injuries, but we survived.

Thanks to a handful of moderate Democratic senators, a provision was stripped from the legislation written by Majority Leader Harry Reid, D-Nev., that would have established explicit federal regulation of broker commission schedules for health insurance. It would have been the worst form of governmental command-and-control over the insurance brokerage sector ever. We’d like to send a huge “thank-you” to Sens. Ben Nelson, D-Neb., Bill Nelson, D-Fla., and Michael Bennet, D-Colo. They and others used their political capital to help us, and we will always be grateful.

But it ain’t over ’til it’s over, and Congress will once again hit the “reset” button on thousands of provisions as the Senate and House attempt to reconcile their very different health reform bills. The Senate was set to approve the bill on Christmas Eve, and the final version of the legislation is likely to be closer to the better Senate version.

All sorts of things may pop up in conference committee, where the House and Senate work out their differences, but we won’t have to worry about provisions requiring the Health and Human Services Department to regulate brokers. Such language was not included in the House bill and is now knocked out of the Senate version.

The Senate legislation also improved somewhat on another price-control issue: the cap on overall insurer administrative expenses. It moved from a flat 10% cap to 15% for groups of more than 100 and 20% for groups under 100.

What the Senate giveth, however, it taketh away. The bill gives some nonprofit health plans a break from the tax on insurers. The exemption would apply to nonprofits that spend at least 92% of each premium dollar on medical expenses. While this would be a tough target to meet, it could, frankly, put downward pressure on commissions.

Moreover, the legislation could have better clarified the ability of brokers to market all products in state exchanges, including nonprofit cooperatives. But we can live with it, and we’ll try to improve it in conference—as a number of conservative Blue Dog Democrats in the House were very sensitive on assuring the “broker role” in whatever health insurance delivery system remains standing.

Is this health reform legislation what we wanted? Of course not. First and foremost, it is not bipartisan. President Obama had said he’d rather have a bill that gave him 70% of what he wanted, with 70 bipartisan votes in the Senate, rather than 100% of what he wanted with 60 Democratic votes only. That seems so long ago (and the president arguably got about 70% of what he wanted with his 60 partisan votes).

The blame game on the lack of bipartisanship will go on for years, and only time will tell whether Republicans will regret their strategy of confrontation. As Sen. Richard Burr, R-N.C., put it on the eve of the final Senate votes: “If [Reid] doesn’t get 60 votes, the American people win. If he does get them, America’s payback will come in the form of the 2010 elections.”

We’ll see.

The practical impact of the Republican strategy put The Council in a very difficult position. Because Republicans weren’t playing ball, we had few of our natural allies on business issues to turn to. So from the get-go, we had to trim our aspirations. There was no hope of meaningful reform addressing defensive medicine. There was no prospect of expanding the ERISA model to more Americans. There was little opportunity to use the tax code as an effective incentive for changing behavior.

There are two sides of the Massachusetts healthcare initiative, and we wanted the good stuff from that reform to be the legislative lesson for the nation. Instead, we got much of the bad stuff—insurance market reforms that aren’t backed up by a strenuous individual mandate and exchanges that will only serve as an incentive for employers to scale back or drop their coverage. And in the process, our industry was demonized as never before.

We started out in the year with the White House health reform czar saying that one of the reasons Congress should enact a “public option” is “because you wouldn’t have brokers out there selling.” The initial versions of the legislation in the House and the Senate would have explicitly excluded brokers from selling products in exchanges in favor of labor unions. And deep into December, Reid was pushing a plan that would have put agent and broker commissions under the federal thumb. Sure, things could have turned out a lot better, but they also could have been a lot worse. And your commitment to political involvement made the difference in this debate.

Wood is The Council’s senior vice president of Government Affairs.

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