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?
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