Don’t leave us out, insurance agents tell legislators

My Suburban Life reports:

“Insurance industry officials urged state lawmakers Thursday to let independent insurance agents help clients purchase coverage through Illinois’ future health-benefits exchange.

Several said it also would be a good idea for the insurance industry to be represented, but not dominate, the board that will govern the exchange as it provides uninsured individuals and small businesses access to affordable, private health-care coverage by 2014.

“No entity or group of individuals has more to offer to ensure the success of Illinois’ health-benefits exchange, and no entity or group of individuals stands to lose more if they are cut out or effectively displaced by an exchange,” said Phil Lackman, vice president of the Independent Insurance Agents of Illinois.

Lackman said the livelihoods of 25,000 independent insurance agents and brokers in Illinois — whose average annual income is $60,000 — could be harmed if those professionals are prohibited from selling insurance policies to consumers through the exchange, or if the state creates a large state agency with workers who would take the place of insurance brokers.

Lackman, one of several insurance industry officials to testify in front of the Illinois Health Benefits Exchange Legislative Study Committee, said the exchange’s board should include an insurance broker and representative of an insurance company.

“Everyone has a potential conflict,” he said. “The key is not having a lopsided board.”

It’s unclear how much a health insurance exchange in Illinois would cost to operate, but Lackman said the insurance industry shouldn’t be the sole source of funding for a proposed self-supporting exchange.

Fox on guard?

Jim Duffett, executive director of the Campaign for Better Health Care, a consumer advocacy group based in Champaign, said consumers would suffer if the insurance industry had a spot on the exchange’s board and was able to avoid paying for the exchange.

“The insurance industry’s proposal is like the fox guarding the chicken coop,” he said. “It is ensured to fail, and the people of Illinois deserve much better.”

Brian Imus, director of Illinois Public Interest Research Group, told the committee that insurance industry officials should be prohibited from serving on the exchange’s board to promote public trust of the new organization.

The 12-member, bipartisan study committee is expected to make recommendations by the end of the month that could serve as a blueprint for the General Assembly in drafting legislation as soon as the fall veto session on how the exchange will be governed and funded.

State-level exchanges that serve as a clearinghouse for private health plans and dole out federal subsidies to applicants based on income will be key to the federal health-care reform law known as the Affordable Care Act.

Illinois’ exchange is expected to serve as many as 1.3 million people each year, in part through a new website that would make comparisons of insurance policies simpler.

The website also would help low-income people sign up for the Medicaid program with eligibility standards that will be expanded with federal dollars to include all people — regardless of whether they are caring for children — whose income is below 138 percent of the federal poverty level.

But the website won’t reduce most of the need for insurance agents, Lackman said.

“Some people will be able to self-enroll,” he said. “We believe the vast majority of people in Illinois are going to want the knowledge and expertise of an agent-broker. Insurance is not an airline ticket. It’s complex. It’s vital to your health and your financial security.”

Time is short

Several lawmakers on the study committee said they are concerned they may not have enough time to make well-informed recommendations, as scheduled, by the end of the month or in time for the October-November veto session.

Committee member Sen. Bill Brady, R-Bloomington, said the committee may need to serve as an interim governing board for the exchange.

“It may be premature to turn this over to a non-legislative body so quickly,” he said.

Officials from Gov. Pat Quinn’s administration have told the committee that legislation settling up the basics of the exchange needs to be passed by early 2012.

Those officials said passage during the veto session will give Quinn’s staff enough time to file paperwork with the federal government so Illinois can qualify for millions of dollars in federal subsidies to cover the exchange’s startup costs.

Dean Olsen can be reached at 788-1543.


What’s next

The Illinois Health Benefits Exchange Legislative Study Committee will meet at 10:30 a.m. Wednesday in Chicago to discuss the costs of a health-benefits exchange and details needed to make recommendations to the General Assembly.


The uninsured in Illinois

*1.9 million people were uninsured in 2010, representing 14.8 percent of the population.

*1.66 million people were uninsured in 2005, representing 13.2 percent of the population.”