A Message from PIA's President
July 2009
Not too long ago, I had this frightening dream. Actually, it was a nightmare. I dreamt that Congress tried to create and fund a system of federal government insurance agencies in every state. It even prohibited any current insurance agent from being involved in the lines that these federal insurance agencies would sell.
Far-fetched? Yes. But when I woke up, the nightmare didn’t end because it was true.
As preposterous as it sounds, this is exactly what Sen. Edward M. Kennedy (D-Mass.) is proposing as part of his comprehensive health care “reform” bill:
A “Navigators” program that would award grants to public and private entities to “conduct public education; distribute fair and impartial information regarding health plans; [and] assist with enrollment and provide information.”
In short, these would be government-funded and operated insurance agencies or brokerages. You can read more about them on page three of the next issue of PIA Connection.
That our nation’s system of health care — specifically, how we finance health care — needs to be improved is not a matter for debate. What is being debated is whether the federal government should assume an ongoing role in health insurance. PIA believes that Congress should build on the private health care delivery system, not seek to dismantle it.
According to the latest U.S. Census figures, of the 282 million Americans with health insurance, 201.7 million are covered by private health insurance and 80.3 million are covered by government health insurance. The private sector successfully covers more than two and a half times the number of our citizens than the government covers. That’s why we oppose the creation of government-funded insurance agencies or brokerages for health insurance that would displace private-sector professional insurance agents.
For years, state governments have prudently demanded a level of professional competence in guiding people with health insurance choices as evidenced by educational and licensing requirements. Now the feds seem prepared to throw out all of these standards by excluding the most knowledgeable professionals from this process. How is that supposed to help American consumers?
Having someone say, “I’m from the federal government, and I’m here to sell you health insurance” is not my idea of prudent health care reform.
On the subject of protecting state regulation of insurance, we got word in the past month that the Obama administration’s recommendations on regulatory reform leave the state insurance regulatory system intact. The Treasury’s report does not endorse an optional federal charter. It focuses instead on creating a mechanism to address systemic risk to the financial system, concentrating on the areas PIA has been saying it needs to concentrate: banking, securities and capital markets.
Of concern is Treasury’s recommendation that a federal Office of National Insurance (ONI) be created. While we would like to believe the proposed ONI will not be used to advance federal insurance regulation, we have serious reservations about creating a federal bureaucracy for insurance which could be used to begin to build a structure for full federal regulation of insurance. Rep. Paul Kanjorski (D-Pa.), who has proposed a similar Office of Insurance Information (OII), said recently, “I believe that only ostriches can now deny the need for establishing a federal insurance resource center and a basic federal insurance regulatory structure.” [our emphasis added]
In the days before the Obama Treasury’s recommendations were issued, PIA was invited by the White House to a pivotal meeting with industry representatives. The June 4 meeting at the White House was held to get insurance industry input on regulatory reform. After the meeting, the Wall Street Journal reported that the Administration was caught off guard by the division on the issue of federal regulation of insurance. Subsequently, federal regulation was not proposed in the Treasury report.
PIA used its participation in that White House meeting well. Len Brevik, our CEO, spoke out most forcefully in support of state regulation of insurance and in opposition to federal regulation, while other groups were advocating an optional federal charter. Apparently, Administration officials concluded that there is no consensus within the industry on OFC, which happens to be true.
Having worked on Capitol Hill, I know that sometimes there is a tendency by some groups to soften their views or develop a case of organizational laryngitis at pivotal meetings such as these, in order to ensure that they get invited back. I am proud that PIA stood its ground in this setting and gratified that our forthright presentation of our views may have contributed to federal insurance regulation being excluded from the Treasury’s recommendations. Well done!
Kenneth R. Auerbach, Esq.
President
PIA National