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The Unknowns

We escaped some very bad reform legislation, but there is still a lot to do and figure out.

By  Joel Wood

As a trade association lobbyist, it’s dangerous to identify favorite execs. After all, we love all our members. That said, Bob Klonk of the Oswald Companies in Cleveland ranks in the pantheon of the most plainspoken, hard-charging and brutally funny guys to have served in our leadership. He’s also the perfect metaphor for the pivot our trade association has made to give benefits member firms representation equal to that of property-casualty members.

In my early years with The Council, we were the “National Association of Casualty and Surety Agents.” With a tiny staff, we more or less faked it on the benefits side. When Bob, the consummate benefits guy, joined our board several years ago, he sent me groaning emails whenever I sent updates about our property-casualty regulatory reform issues. Here is one of his “reply all” responses: “I can’t begin to tell you how little I care about this!” He was kidding (I think), but he also was making the right point: We had to get our act together on healthcare reform, which would have profound consequences for our member firms and their clients.

Fast forward. On the morning after the House passed healthcare reform in March, a separate positive development occurred in our quest to get surplus lines reform passed into law, and I shared it widely. I barely heard a peep from our members.

Healthcare reform transfixed and dominated the consciousness of our membership.

Instantly, we pivoted from the politics of healthcare reform to implementation of the new law. Paraphrasing former Defense Secretary Donald Rumsfeld, there are known knowns, known unknowns, and unknown unknowns with regard to the ultimate impact of this overhaul.

With virtually nothing in the legislation that addresses the underlying costs of healthcare, insurance market reforms unaccompanied by effective mandates, and massive new subsidies “paid for” with bogus accounting tricks, the overwhelming majority of Council member executives with whom I speak think the legislation will ultimately have dreadful consequences for the country. But the same execs recognize terrific opportunities to bolster the value proposition to their clients as they help them navigate the hazards of compliance issues and become an even more critical link in securing affordable coverage.

We have immediate and long-term tasks ahead in representing the interest of Council firms as regulations are promulgated. But before we move on, let’s remember what could have happened in healthcare reform but didn’t, largely due to our lobbying efforts.

We started 2009 with the White House health czar openly proclaiming disintermediation of those “brokers out there selling” plans as a benefit of ObamaCare. The premise was that brokers were an unnecessary administrative expense and that the federal government could distribute health insurance products more effectively.

The original iteration of the House and Senate bills had a single national exchange for individuals and small businesses, with legislative language ignoring brokers and promoting the idea of labor unions and the Small Business Administration as better distributors. The original bills had “public options” that threatened to put private plans into a death spiral.

When Senate Majority Leader Harry Reid, D-Nev., released his “merged” bill for Senate floor consideration, he included the creation of a broker compensation authority at the Department of Health and Human Services, plopped on top of state-based exchanges. To say this proposal was offensive, given the fact that neither of the two committees of jurisdiction had ever debated or approved the idea, is an understatement.

After Scott Brown’s Senate victory in Massachusetts deflated the prospects for healthcare reform, President Obama aggressively proposed a new rate-setting office at HHS. That would have likely been just as bad as the broker comp authority in the long run—the worst of command-and-control government price controls.

None of those things were signed into law. Working with blue dog Democrats, we got explicit broker access language inserted into the law for exchange products. The close relationships of a handful of Council executives with moderate Senate Democrats were successfully translated into the elimination of the Reid broker comp provision. And in the “I’d rather be lucky than good” category, the HHS rate authority didn’t make the final cut because it didn’t fit under budget reconciliation rules.

As one of our leaders put it in a conference call the morning after the bill passed, “It’s a bag of (expletive deleted), but it could have been a much bigger bag of (expletive deleted).”

So, we move on. We make the best of this. We know Council member firms are the marketplace winners who prove their value every day, and we are confident that they’ll serve the needs of their clients better than ever before. We’ll intervene to try to positively affect the regulations, and we’ll seek corrective and clarifying legislation. On the big picture issue of erosion of employer-provided health insurance, we’ll do what we can to make lemonade out of the lemons.

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


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