Insurance Agents Hit House Health Bill As Bad for Small Business

The leaders of the Independent Insurance Agents and Brokers of America (IIBA) are not pleased with the healthcare reform bill that was passed by the U.S. House of Representatives.

The group is particularly opposed to the public option included in the bill. But it also has trouble with the tax hikes, a requirement that small businesses offer insurance or pay a penalty, and a grant program to non-profits so they can provide health insurance counseling.

“The Big ‘I’ is greatly disappointed that after months of negotiations, hearings, votes and debate in three House committees we seem to be back on square one: a bad bill that includes a ‘public option’ and deprives the American people of true choices in their healthcare.” said Robert Rusbuldt, IIABA (Big “I”) president and CEO.

“The House passed a bill today that includes a government-run health insurance plan (public option) that would unfairly compete with the private insurance marketplace, limit consumer choice and increase the taxpayer burden,” said Charles Symington, Big “I” senior vice president of government affairs. “This bill picks winners and losers, and small businesses and healthcare consumers are the biggest losers today.”

In order to finance the government-run health insurance plan, a 5.4 percent surtax would be imposed on small businesses that file as individuals. The legislation will also require that small employers with more than $500,000 in payroll offer their employees health insurance and subsidize their premiums, 72.5 percent subsidy for individual plans and 65 percent for family plans. If a small business is unable to afford this new mandate, it would be subject to an 8 percent payroll tax.

The Big “I” said these burdens would apply even if a business can’t afford the costs.

“An unreasonable employer mandate coupled with a huge tax increase will put many small businesses in the untenable position of deciding between job cuts, employee pay cuts, or shutting their doors,” said Symington. “Health care reform should not be financed on the backs of small businesses that are struggling to make ends meet in this very difficult economic time.”

Finally, the legislation creates a new Small Business Administration grant program that would award federal money to non-profits for the purpose of providing small businesses with less than 100 employees assistance with consumer information, outreach, counseling and enrollment.

“Small businesses seeking information on what health insurance plan best fits their needs should be able to count on sound advice from a licensed health insurance agent, broker or consultant,” said Symington. “It is simply reckless to hand this trusted role over to random non-profits with no relevant health care background or training.”

Rusbuldt urged the Senate and House to “reconsider what this bill will do to consumers and small businesses.”

Another agents’ group, the National Association of Professional Insurance Agents, expressed its concerns as the bill headed for a vote.

PIA National Director of Federal Affairs Mike Becker also took issue with the SBA grants under the health insurance exchange system, although he said agents were heartened that a provision allowing agents and brokers to offer health plans available through the insurance exchanges was included.

Becker said that under the SBA program, non-profits would be performing the functions of an insurance agency or brokerage for small groups of fewer than 100. He said independent, private sector insurance agents and brokers are better equipped to offer their clients objective assistance in “navigating” the choices offered through health insurance exchanges. In contrast, he argued, a government-funded agency or third-party contractor “could employ unlicensed individuals with no expertise in health insurance to perform functions that currently require state licensing.”

“The SBA provision is unnecessary and duplicative, and should be removed,” he said.

National PIA also criticized the section repealing the McCarran-Ferguson Act antitrust provision for health insurance and medical malpractice insurance as unnecessary.

Finally, agents raised concern about the cost of the House bill, estimated to be close to $900 billion.

“That’s real money. We’ve added trillions to our national debt, which will eventually have to be paid. The question that needs to be asked more often in Congress is: ‘Can we afford it?'” said PIA National Executive Vice President and CEO Leonard C. Brevik.

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