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Under the Dome by Joel Wood The 15% Solution

If a government health plan is imposed, will it be treated like private plans? Pay premium taxes to states? Allow brokers to sell it?

By  Joel Wood

It was 1984. The Senate Intelligence Committee was grilling CIA Director Bill Casey about the contentious mining of Nicaraguan harbors, and Sen. Jake Garn, R-Utah, had had enough. Throwing his briefing book across the room, he screamed at Sen. Pat Moynihan, D-N.Y.: “You’re all a--holes—the whole Congress is full of a--holes, all 535 members are a--holes!

Having toiled for 17 years in Congress representing the sophisticated member firms of The Council of Insurance Agents and Brokers, I find elements of the debate on healthcare that make me look back sympathetically to Sen. Garn’s, uh, observation. How else to describe the frustration when Sen. Ted Kennedy, D-Mass., proposed that labor unions, but not licensed brokers, would be eligible to sell the new “public plan” to millions of Americans? How to respond when a 25-year-old Senate staffer lectures us on how brokers haven’t reduced healthcare costs? And where are our emotions supposed to be when policymakers suggest that anything that’s not between a patient and a doctor is an administrative expense that can be slashed through the “fair competition” of a government-run plan?

By the time you read this, healthcare reform will be in full tilt and doubtlessly unresolved, with incredibly high stakes for brokers and clients alike. The Obama administration has done a magnificent job of clearing the decks in Congress, building momentum, co-opting potential opposition, dividing the business community, and setting the stage for comprehensive reform. The timetable for legislative action has been breathtakingly speedy. The administration understands the principal lesson of the failed Hillary-care debate of 1993-94: The longer a big proposed reform sits out there, the more barnacles it picks up, thus the more likely it is to fail.

The reordering of 17% of the economy in the space of a few months is an exceptionally difficult proposition, especially when the Founding Fathers deliberately set up Congress to be dysfunctional. There are critical flashpoints as Congress attempts to reconcile its differences this fall:

· Will the existing health community hold firm against the government-run plan? The American Medical Association looked a little silly in June when it announced, then renounced, its opposition to a public plan.

· Is it possible to have a construct for a government plan that truly is fair competition that could “keep the health insurers honest”? We at The Council don’t believe so. The crowding-out factor of a federally imposed alternative will be inevitable, if experience in other federal programs (student loans, for example) is any barometer. Yet moderate Democrats in both the House and Senate proclaim their desire to achieve such a goal. To their credit, they’ve been solicitous of our ideas, but it’s hard to help them figure out how to thread that needle. Plus, if the goal is a “level playing field” for the feds to compete with private plans, then what exactly is the point? Will they pay premium taxes? Will they be subject to lawsuits in state courts? Will they be subject to the same state and federal mandates and regulations as the private industry?

· Will we—brokers and agents—be able to dispel forever the “navigator” concept embedded in Kennedy’s legislation? If Congress passes a law that includes a government-run option, and that option cannot be marketed through licensed brokers under the theory that brokers have a conflict of interest, then we have pitifully failed. Certainly, we have supported scores of members of Congress who have a genuine appreciation for the role of the broker in securing the best possible benefit plans for millions of American employees. But there are some who apparently will always see intermediaries as little more than profiteers getting their piece of the healthcare action.

· How far will Congress go in taxing benefits? Notwithstanding the Obama campaign pledge not to do, most Democrats seem to accept the reality that benefits will be capped on the basis of income.

· The president said in June that he’d rather have an overwhelming bipartisan vote in Congress on a bill that contains 85% of what he wants, rather than a narrow, partisan victory on 100% of his wish list. What’s the definition of victory? Two years ago, Democrats would have been ecstatic with the prospect of achieving an individual mandate, low-income subsidies, guaranteed issue, modified community rating for small groups, elimination of pre-existing conditions restrictions, and billions for health information technology and prevention programs. Well, there is a near bipartisan consensus for all of these things today; they are all highly achievable. The president could take them, declare victory, and the reforms could well work, depending on how they’re fashioned. Is the imposition of a government-run health program part of the 15% that the president could live without, or is it the ultimate goal?

The resolution of these questions will make clear if this Congress is interested in the value that brokers bring to the marketplace. If not, I pray I won’t be as enraged as Sen. Garn was back in ’84. I can see the response already, the one that Sen. Moynihan gave that day as he looked at Garn over his glasses: “When you call me an a--hole, smile.”

Wood is The Council’s senior vp of Government Affairs.

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