The insurance industry is notoriously cyclical. The same can be said of the efforts to reshape the laws that govern it. As we enter a new decade, the legislative tilts impacting the insurance industry will bear more than a passing resemblance to the ones populating the years that preceded it.
The most visible (and audible) example of this is the ongoing debate over health care reform. While other debates central to the insurance industry have percolated far from the public eye, the health care debate assumed center stage, and industry-specific argot such as medical loss ratio was suddenly in the vernacular. On Christmas Eve, after a good deal of legislative logrolling, the Senate passed a health care reform bill so obtuse it managed to elicit criticism from all sides of the debate.
"Specific provisions in the legislation will increase, rather than decrease, health care costs; reduce coverage options; and disrupt existing coverage for families, seniors and small businesses," was the expected, measured reply of Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP).
However, the point was made. In a blog posting, White House Communications Director Dan Pfeiffer left no doubt who would be blamed for the failure of health care reform. "At a time when insurance companies are finally about to be reined in, and when American families are finally about to be given control over their own health care, opponents of reform are advocating that insurance companies once again be allowed to run wild."
Despite these unkind words, insurers may well look back at 2009 as a year the industry dodged some regulatory bullets. While we await the reconciliation of the Senate bill with the version of the reform passed by the House, it is relatively certain that some of the ideas most noxious to the industry, such as creation of public option and expansion of Medicare, have little chance of becoming law. The roughly 30 million new consumers in the marketplace are a consolation for the most problematic provisions likely to pass, including prohibitions against rescission and exclusions for pre-existing conditions.
Elsewhere, industry lobbyists were able to excise a provision from the Senate bill that would have granted the U.S. Secretary of Health and Human Services the power to set commissions for brokers selling in the proposed state insurance exchanges.
But changes to the health care bill were far from the only legislative victories the insurance industry can tally. After the financial services meltdown, it wasn't much of a stretch to assume that insurers would be swept up in the maelstrom of regulatory modernization. Yet, insurers were largely exempted from efforts to squelch systemic risk, such as the Wall Street Reform and Consumer Protection Act of 2009. Moreover, they helped guide the creation of the Federal Office of Insurance.
Considering all this, insurers may hope that when it comes to regulatory matters, that they are as fortunate 2010 as they were in 2009.
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