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A Health Care Reform Primer


Unlike 1994 during the Clinton health care debate, ... Timeline for Health Care Reform Legislation Political Outlook & Momentum What Will the Legislation Include? – PowerPoint PPT presentation

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Date added: 4 June 2020
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Title: A Health Care Reform Primer

A Health Care Reform Primer
  • What Does Health Care Reform Mean
  • For The Independent Insurance Agent Broker?

Health Insurance Revenue Impact
  • ?61.8 of Agencies Sell Health Insurance.
  • ?14.4 of Their Total Revenue is From Health
    Insurance Sales.
  • Breakdown of Sales
  • 15 Large Group (51 employees)
  • 25 Individual
  • 60 Small Group (2-50 employees)
  • Employee Benefits, including health care sales,
    is the fastest growing line of business for
    independent insurance agents.

Health Insurance ReformNot If.But When and
  • ?The Time is NOW for Independent Agents Brokers
    to get involved!!!
  • ?May 13th -- Major Health Insurance Producer
    groups including AHIA, CIAB, IIABA, NAHU and
    NAIFA joined forces in a letter to congressional
    leaders promoting the value of Health Insurance
  • ?The organizations collectively represent over
    500,000 health insurance agents, brokers,
    advisors, consultants and employee benefit

Timeline for Health Care Reform Legislation
  • Reform negotiations are moving quickly on Capitol
  • In May, DRAFT legislation is expected to be
  • Proposals to Improve Patient Care Reduce Health
    Care Costs
  • Proposal to Provide Affordable Coverage to All
  • Proposal for Funding
  • In June, legislation is scheduled to be
    considered and voted on by the Senate committees
    of jurisdiction.
  • In July, legislation is expected to be considered
    by the full Senate.
  • The House will follow suit.

Political Outlook Momentum
  • Given the strong Democratic gains this past
    November in the House (257-178) and Senate
    (59-40), the Obama Administration is well
    positioned to pass a health care reform proposal
    this year.
  • The Obama Administration has labeled health care
    reform as their 1 domestic priority.
  • May 11th watershed event bringing health care
    industry leaders together promising to cut 2
    trillion in costs over 10 years.

What Will the Legislation Include?
  • Consensus Items vs. Points of Contention

Consensus Items Part I
  • Universal Coverage Health Insurance will be
    available to all Americans.
  • Guaranteed Issue All applicants, regardless of
    health status, will be able to purchase health
  • Individual Mandate There will be a
    requirement, likely enforced through the tax
    code, that all Americans purchase a health
    insurance plan. Noncompliance will result in a
    tax penalty or fine.

Consensus Items Part II
  • Health Insurance Exchange/Connector An
    independent entity will be created, the primary
    purpose of which will be to organize affordable
    health insurance options, create understandable
    and comparable information about those options
    and develop a standard application for enrollment
    in a chosen plan.

Underlying Issues of the Health Insurance
  • Will agents and brokers be included in the
    connector/exchange sale and delivery force?
  • What will the commission structure be inside of
    the connector/exchange?
  • Will it be a national exchange/connector or will
    it be state-based?
  • Will a portion of the small group market be
    folded into the individual market?

Points of Contention
What is the Public Plan?
  • A government-run health insurance plan that
    would be matched against private plans in the
  • In theory, individuals and perhaps small
    businesses would have a menu of private options
    as well as the ability to purchase the
    government-run health insurance plan.
  • Supporters of the government-run option believe
    it will keep health carriers efficient and lower
    health care costs.

What Does the Public Plan Mean for Agents and
  • A public plan is something thats sponsored by
    the government, and therefore has very low or
    almost nonexistent administrative costs, compared
    to others. It doesnt have the need to have
    brokers out selling it wouldnt have the need to
    have a lot of costs and profits, the way private
    plans would. So it has that advantage.
  • - Comments by Nancy-Ann DeParle, Counselor to
    the President and Director of the White House
    Office of Health Reform.

What Would the Public Plan do tothe Private
  • According to a 2009 Lewin Group Study, if the
    public plans reimbursement rates are similar to
    Medicare, an estimated 119 million people will
    shift from private insurance to the public plan.
    In total, the Lewin study estimates that 131
    million people will enroll in the public plan.
  • Within years, private insurers could be driven
    out of business A Single Payer System will

How will the Public Plan Operate?
  • The public plan will operate with the compassion
    of the IRS and the efficiency of the post
  • Comments by U.S. Representative Kevin McCarthy
    (R, Calif.) at the IIABA Legislative Conference
    Convention, April 29, 2009.
  • Quotes were included in our Joint Industry Letter
    from recent studies on the performance of the
    Medicare and the IRS help centers showing many
  • Confusing Interactive Voice Response (IVR)
  • Unacceptable long wait times (up to one hour
    during peak)
  • Disconnected calls
  • Incorrect information routinely being dispensed
  • High caller abandon rate

Employer Mandate
  • There is discussion in Congress of requiring
    employers to offer their employees health
    insurance. Noncompliance would result in a tax
    penalty or fine.
  • For small businesses, there is talk of requiring
    them to supplement the purchase of their
    employees health insurance purchase in the
    exchange/connector rather than requiring them to
    offer a full benefit package.

What is the Impact of an Employer Mandate?
  • A 2009 NFIB study found that 1.6 million jobs
    would be displaced within the first five years of
    implementation 66 coming from small businesses
    real GDP would contract by 200 billion.
  • A 2007 Employment Policies Institute study found
    that 1.5 million workers would be shifted from
    full-time to part-time status as a result of the

  • ?Q. How do you pay for an estimated 1.3 trillion
    health care reform package?
  • ?A. Increase Taxes
  • ?Remove Employer Tax Deduction of Employee Health
    Care Benefits Under current law the money put
    forward by employers to purchase health insurance
    for their employees is tax-deductible.

Cost Controls
  • The Centers for Medicare and Medicaid Services
    (CMS) projects that health care spending will
    total 2.5 trillion this year and increase to
    4.4 trillion by 2018.
  • Cuts will have to be made to medical
    reimbursement rates, commissions, etc.
  • The question is how big are the cuts and where do
    they come from

Budget Reconciliation Part I
  • Each year when Congress writes the budget
    resolution, they may include reconciliation
    instructions for the purpose of legislating
    mandatory spending and tax revenue policy
  • Under normal Senate operating procedures, it
    takes 60 votes to prevent a filibuster and pass
    legislation. With reconciliation, it only takes
    51 votes to gain passage of a measure.

Budget Reconciliation Part II
  • Included in this years congressional budget
    resolution are instructions to consider health
    care reform legislation under the budget
    reconciliation process effective October 15th.
  • Therefore, if a bipartisan deal has not been
    reached by October 15th, the Democratic
    Leadership has the power to fast track passage of
    legislation in the Senate with a mere 51 votes.

What are we fighting for?
  • Unlike 1994 during the Clinton health care
    debate, interest groups and relevant trade
    associations are at the table negotiating a deal.
  • We cant simply oppose health care reform
  • IIABAs focus is on preserving the role of
    independent agents and brokers in the sale and
    delivery of health insurance.

What can you do?
  • Schedule meetings with your congressmen and
    senators over the Memorial Day recess (May
    25-June 1).
  • Attend town hall meetings with your congressmen
    and senators many will occur over the Memorial
    Day recess.
  • Talk with your clients explain how their
    businesses could be adversely affected.
  • Talk with your local business groups chambers of
    commerce, rotaries, etc.
  • Participate in IIABA Grassroots initiatives that
    will be activated soon

Points to Stress in Meetings with Policymakers
Part I
  • Independent insurance agents and brokers serve as
    trusted advisors in the placement, installation
    and ongoing service of health insurance to
    individuals as well as small and large companies
    and their employees.
  • Each individual and business has distinct health
    care needs, and agents help them navigate the
    complexities of the market to find the best
    coverage Independent insurance agents help
    their clients understand the market, not the

Points to Stress in Meetings with Policymakers
Part II
  • The work for agents doesnt end at the sale as
    independent agents help their clients through the
    claims process and deal with any problems that
    may arise.
  • Independent insurance agents and brokers are
    consumer advocates and should be part of the
    delivery force inside any health insurance
    exchange or connector not displaced by a new
    government bureaucracy.

Points to Stress in Meetings with Policymakers
Part III
  • The cost of this important advisory role
    represents a very small percentage of overall
    health care spending.
  • According to a February 2009 Milliman Research
    Report, administrative costs for insurance
    carriers in aggregate are approximately 6.9 of
    health care costs.
  • Further, the study found that the cost of the
    broker-based distribution system only equals 0.2
    of total health care spending.

Points to Stress in Meetings with Clients and
Civic Group - Part I
  • If the public plan is implemented, the private
    market will fold within years and we will be on
    the fast track to a single payer system.
  • If the public plan is implemented, it is the
    consumer who will suffer. Your health care
    consultant will be a bureaucrat in Washington
    not your local insurance agent.

Points to Stress in Meetings with Clients and
Civic Groups - Part II
  • If an employer mandate is implemented, 1.6
    million jobs could be displaced within the first
    five years 66 coming from small businesses.
  • If the employer tax deduction is removed,
    businesses will be hit with an estimated 246
    billion per year tax increase. A tax increase is
    exactly the wrong medicine for businesses in this
    time of economic uncertainty.

The Challenge Ahead
  • If you dont fight for your livelihood, who will?
  • If we dont stop this, whats next (e.g. workers
  • If you would like more information on IIABA
    grassroots activities, please contact Jen
    Dlugasch at 202-863-7000 or send an email to
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