Washington, DC – Insurance salespeople are on Capitol Hill today lobbying Congress to support a bill that would gut federal health reform cost-saving rules and increase consumer health insurance premiums to protect brokers’ sales commissions. The top three lobby associations representing insurance agents and brokers gave members of Congress $3.18 million in the 2010 election cycle, and two-thirds of those contributions went to Republicans, according to data reported by the Center for Responsive Politics.
The sponsors of the legislation on behalf of insurance agents and brokers, Rep. Mike Rogers (R-MI) and Rep. John Barrow (D-GA), received $16,000 and $12,500 respectively from the insurance sales lobby associations in the last election cycle. House Speaker John Boehner made a keynote address to kick off the Independent Insurance Agents and Brokers of America’s Lobby Day this morning. Boehner received $48,000 in campaign contributions from the three insurance sales associations in the last election cycle.
The insurance sales groups spent $3.9 million lobbying Congress last year and lobbying expenditures have likely increased in 2011, said Consumer Watchdog, citing reports that at least one of the groups has hired outside lobbyists at Ernst & Young to build support for the legislation.
“This bill is not a small change to an isolated piece of the health reform law. It is an attack on health reform’s central requirement that insurance companies eliminate excessive overhead spending and profits,” said Carmen Balber, Washington director for Consumer Watchdog. “If Congress approves this special interest legislation, it will eliminate one of the few provisions in health reform that is meant to make health insurance more affordable. Consumers will pay more in health insurance premiums and lose out on one and a half billion dollars in rebates.”
Federal health reform requires insurance companies to spend 80 percent or 85 percent of premiums on health care instead of administrative costs or profits. Reps. Rogers and Barrett introduced HR 1206 to change the federal health reform law and allow insurance companies to exclude insurance sales commissions from their administrative cost limit of 15 percent to 20 percent when calculating how much they spend on actual health care.
Investment analysts calculate that under the current law, health insurers would be required to pay up to $1.5 billion in rebates to consumers, or reduce premiums to avoid rebates. By excluding a substantial administrative cost from the administration vs. health care calculation, the legislation would effectively take the rebate money from consumers, allowing insurance brokers and agents to keep higher commissions and insurance companies to maintain higher profits.
“Health insurance brokers and agents get percentage commissions from insurers, so their income has presumably risen in tandem with the 134% average rate increase in health insurance over the last decade,” said Judy Dugan, research director of Consumer Watchdog. “They want to keep all those outsized gains, rather than face any pay cut by insurers that are trimming overhead to comply with the law.”
The broker legislation would deal a death blow to one of health reform’s most important consumer protections, said Consumer Watchdog. The insurance agent and broker associations support conservative plans to fully repeal the health reform law.
The organizations included in the Consumer Watchdog analysis of campaign contribution and lobbying expenditures are the National Association of Insurance and Financial Advisors, the Independent Insurance Agents and Brokers of America and the National Association of Health Underwriters.
Download Consumer Watchdog’s detailed comments on the legislation, made in a letter to the National Association of Insurance Commissioners (NAIC), at: http://www.consumerwatchdog.org/resources/naiccomment3-21-11.pdf
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Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org