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After much debate in the US House of Representatives and the Senate, Democrats in Congress appeared to be on the verge of signing their historic healthcare reform bill into law at the beginning of 2010.
However, a 19 January surprise victory by Republican Scott Brown in the traditionally Democratic Senate seat of Massachusetts threw the Democratic majority off balance, and the future of the reform bill into question.
Stakeholders throughout the US healthcare industry, including many financial advisers, have been left wondering what the future holds.
The Obama administration claims the reform will assure high quality, affordable healthcare for all, bringing insurance to about 30m additional Americans.
The government also said reform would bring down long-term costs and would not add to the deficit. The government's health reform website states: "President Obama has demanded that health insurance reform not add to the deficit, and has identified hundreds of billions of dollars in savings by eliminating unnecessary subsidies to insurance companies through Medicare."
However, some stakeholders in the healthcare industry raise questions about funding for the reform. J Knox Singleton is president and chief executive of Inova Health System, a not-for-profit hospital in the Washington DC area that aims to provide healthcare to all, regardless of ability to pay.
While Mr Singleton acknowledged that expanding healthcare will make a major contribution towards covering small business and the working poor, he also pointed out that this expansion will come at a cost.
He explained: "There is a lot of scepticism about whether the plan will accomplish the amount of saving that it relies upon.
"Millions of people are going to get insurance who did not have it before. Half of that expansion is paid for by taxes and penalties. The other half is paid for in reductions in payments to hospitals and doctors. That is the overall funding strategy.
"The big problem policymakers face is that if they reduce the amount that doctors are paid to take care of Medicare patients or Medicaid patients, which is the heart of that proposal, you are going to have a tremendous shortage of physicians."
The proposed start date for the reforms is 2014. However, key differences between the House and the Senate versions of the bill remain to be reconciled.
For example, the two chambers of Congress are yet to reach an agreement over taxation. The House plan includes a tax on wealthier citizens while the Senate plans to put an excise tax on more expensive insurance plans, thereby encouraging insurers to keep costs down. This so-called 'Cadillac' tax would impose a 40 per cent tax on the value of individual health plans over a set limit.
Another major cause of debate between the two chambers is the form that insurance exchanges, a new proposal, will take. These exchanges will effectively be markets for consumers to compare competing healthcare policies before buying them. The Senate bill proposes an insurance programme run on a state-by-state level, while the House bill supports a nationwide, federally-run programme.
This aspect of the reform could significantly affect financial advisers. As it stands now, brokers will be able to sell on the exchanges. What remains to be seen is how necessary their advice will be.
Alan Katz, a Los Angeles-based insurance adviser who writes the Alan Katz healthcare reform blog, said: "If the reforms limit the choice offered and the range of benefits that might be available, and move towards a one-size-fits-all approach, the need for people to use health advisers diminishes substantially.
"There will still be some people who want to use us, but if everyone is buying vanilla ice cream you do not need an expert in frozen desserts to give you advice."
Terry Frett, president of Wisconsin-based insurance brokerage Frett Barrington, which specialises in health insurance for small to mid-sized businesses, also expressed his concern that reforms would affect the demand for advice.
He said: "If people have choices they welcome the assistance of a professional adviser. If their choices are taken away there is not going to be as much of a need for advice."
One positive element for advisers is that the Senate bill includes a proviso that stakeholders, such as financial advisers and insurance brokers, must be consulted in the process of creating an insurance exchange.
Mr Katz said: "Hopefully they would turn to the National Association of Health Underwriters. NAHU is the largest organisation devoted specifically to health insurance agents and brokers in the country. Whether it is created at a national level or it is done on a state-by-state basis, our hope is that the regulators will turn to the established professional associations."
Jessica Waltman, senior vice-president of government affairs of NAHU, meets with congressional leaders regularly to discuss the new provisions. She is adamant that the Senate's proposal for a state-run exchange would be in the best interest of advisers.
Ms Waltman said: "The United States is a very, very large country, both geographically and in terms of the number of people.
"When we take a look at something on a federal basis of this scope it can be really hard to provide adequate consumer protections, and for a federal regulator to know what is the best thing for individuals in a particular state. We would prefer to have the exchanges where people will buy coverage at the state level."
NAHU also advocates for regulatory authority over market reforms to remain at state level. Ms Waltman explained: "We do not want to create another level of bureaucracy that will confuse people and be costly.
"It is important for insurance agents as well. They have really strong relationships with their state regulators and work with them closely on a regular basis to make sure people have adequate protections. They serve as a link between the consumer, the insurance companies and the doctors. If there is a problem, the state regulator is who they go to."
The National Association of Insurance and Financial Advisors, a trade association that comprises more than 700 state and local associations representing the interests of 200,000 members nationwide, also weighed in on the debate.
Diane Boyle, vice-president of federal government relations of NAIFA, said: "NAIFA is pleased the proposed reform efforts recognise the important role that agents play in assisting consumers with their health insurance choices - both the House and Senate bills include a role for the licensed insurance professional. But there are a number of additional improvements that we are working on in hopes of having them included in the final version."
These improvements include keeping in place current anti-trust laws and maintaining the role of the agent in the final bill.
While their role may be diminishing in the independent market, Mr Katz anticipated advisers would continue to be involved in the small group market.
He said: "Employers who employ two, five, fifteen employees and do not have a human relations department do not want to make a decision for someone else's family. The idea of bringing in an expert who can help them make the right choice gives comfort."
The future of healthcare reform remains uncertain. All the debate between the House and Senate could prove irrelevant thanks to the unexpected victory of a Republican senator in the historically Democratic state of Massachusetts. The Democrats now have 59 senators to 41 Republican Senators. While the Democrats still outnumber the Republicans, they no longer have the 60 senator majority necessary to prevent Republicans from obstructing or delaying passage of healthcare legislation - also known as filibustering.
In the face of the doubts surrounding reforms there is one outcome US advisers anticipate with greater certainty - lower compensation for their services. At present insurance carriers can accept and decline risk when reviewing applicants. Healthcare reform will remove this ability to pick and choose, thereby forcing carriers to accept all applicants.
Mr Katz said: "Everyone acknowledges that compensation for brokers is going to go down as a percentage of insurance costs. This is not necessarily a bad thing because the market will increase. But in the new world the fact that everyone has to be accepted simplifies the sales role, so compensation is going to go down for brokers."
Lindsey White is a freelance journalist
"The health of nations." Financial Adviser 4 Feb. 2010. Academic OneFile. Web. 17 Mar. 2010.
Gale Document Number:A218295187