Insurance industry weighs in on Obama's Plan

Local insurance agents believe health care reform won't be good for their business, but they also seem certain that many families and individuals would not like sweeping changes.

Several hours before President Barack Obama spoke to Congress on Wednesday, about 60 brokers, agents and insurance company representatives discussed the leading health reform proposals at a Modesto Association of Health Underwriters meeting at the SOS Club in Modesto.

The guest speakers said that reform proponents have lost steam, as evidenced by Obama's declining approval numbers, the passions stirred at town hall meetings this summer and disagreement within the Democratic Party.

"He is between a rock and hard place," said Steven Lindsay, a Sacramento-based lobbyist for the California Association of Health Underwriters. Liberal Democrats are counting on the president's leadership to change the system, he said, but Democrats from conservative-leaning districts question the costs and how much they could lose politically.

The group represents the brokers and agents who make a living selling health plans to employers and individuals. Its national association hopes to raise $1 million for its political action committee this year, a small sum compared with the millions spent by major insurance companies to contest health care reform.

As brokers and agents who work with consumers every day, they believe many people are satisfied with the health system.

Russ Childers, president of the national association, cited surveys suggesting that most Americans are happy with the health care system and the medical care they receive. He said people are concerned that not everyone has insurance and that health care costs too much.

Top priorities are met

While the United States is 37th in a World Health Organization ranking of leading health systems in the world, largely because of declining access to care, the U.S. health system scores high when it comes to responsiveness, prompt attention and giving people a choice of health care providers.

"If you are No. 1 in those areas, you are doing the things that people want from health care," Childers said.

Reform advocates want to create access for the 46 million uninsured U.S. residents with a government-sponsored health option, expansion of the Medicaid program for the poor and changes to the free market health system.

Some proposals would seem to resonate with the public, such as preventing insurers from denying coverage based on existing health conditions and closing a gap in Medicare drug plans that requires some seniors to spend thousands of dollars a year on expensive drugs.

But Lindsay and Childers suggested that many people won't like other aspects of reform bills, such as requirements for individuals to have health insurance, a mandate for employers to buy coverage for workers or pay a penalty, and reduction in payments for Medicare to help cover the costs of the system.

Childers said that a guarantee of insurance for middle-aged adults would sharply raise premiums for younger adults who buy coverage.

The speakers said they doubted that the government could raise enough from taxes on the wealthy and other sources to cover the costs of the system, estimated at $1 trillion over 10 years. In addition, the White House is getting push back from states on Medicaid expansion, because the states would have to help pay for it.

While lobbyists say the industry could lose much of the individual health insurance market, local brokers didn't seem to think reforms would put them out of business.

"It is going to hurt a lot more than it is going to help," said Keith Shepardson, owner of an insurance agency in Modesto. He noted that the Medicare system created in 1965 ended up costing many more times the original projections.

Childers, a Georgia insurance agency owner, said after the meeting that he believes Congress will pass a health care bill this year.

"I don't know if it will be nearly what they are proposing," he said. "I think the president would do well if he backed off major reforms this year and came back to the issue on a bipartisan basis."

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or 578-2321.