The Maryland legislature meets for three months each January and its 188 members consider over 2,000 different legislative proposals. A substantial number of these proposals (bills) are related in some way to the business of insurance. Insurance producer trade associations like the Maryland Association of Health Underwriters (MAHU) and the National Association of the Insurance and Financial Advisors of Maryland (NAIFA-MD) are among the groups that take an active lobbying role each year in seeking to influence legislation that affects the interest of all Maryland insurance producers.
In 1993, health insurance producers in Maryland faced extinction. As part of the national debate that year on health care, House Bill 150 was introduced in Maryland, which would have converted the distribution of health insurance from the traditional broker and carrier model to a system of HIPCs – Health Insurance Purchasing Cooperatives. If enacted, HB 150 would have eliminated the need for insurance brokers in one simple stroke.
The provision of health insurance is not limited to MAHU members alone. For many NAIFA-MD members, it is also an important part of their business. Even property and casualty insurance producers include health insurance among their product offerings to business clients. In 1993 NAIFA-MD recognized the threat to its members and joined together with MAHU in a concerted effort to defeat HB 150.
That effort was formalized as the Joint Legislative Committee (JLC). The JLC gathered the members of both associations and brought them to Annapolis for the express purpose of preserving their careers. In a dramatic bill hearing on HB 150 in the Joint Hearing Room – the largest venue for legislative meetings – hundreds of agents and brokers attended and remained for hours as a legislative committee heard testimony on HB 150. At the conclusion of that bill hearing, the legislation was effectively killed.
The work of the JLC, however, was just beginning. Another bill was introduced – HB 1359 – that was intended to reform the small group health insurance market in Maryland. Again, there was danger for producers in this legislation. In its original form, HB 1359 would have required a pure community rating system for health insurance, thus imposing a significant burden on the clients of insurance producers, as well as other requirements that would have increased costs and removed the flexibility needed by small employers in administering their health insurance plans. The JLC was in the middle of that battle as well. Each year since the passage of House Bill 1359, the JLC has consistently advocated for and against changes large and small to both health insurance laws and other insurance laws that directly affect the interests of insurance producers and their clients. NAIFA-MD and MAHU recognized that by combining their resources they increased their effectiveness, and the two Associations have continued to work closely together through the JLC for the past 17 years.
With the passage of federal health care reform and the creation by State government of health insurance exchanges, the JLC must ensure that the exchanges will not become a modern version of the HIPCs we faced previously. Put another way, the current mission of the JLC is to influence the behavior of Maryland public officials – both elected and non-elected – to guarantee that a new, government-created exchange will not compete unfairly for our insurance business. The danger is real: the Massachusetts Connector, an insurance exchange that has been operating in that state since 2006, recently solicited the health insurance business of tens of thousands of Massachusetts employers. This solicitation went directly to Massachusetts employers using information from the revenue authority in that state. The result was that health insurance producers in Massachusetts, having spent their time and resources developing clients and serving their needs, now face a government entity soliciting their business.
The federal health care reform law gives states substantial authority to build insurance exchanges as they wish. In Maryland, there has been legislation to establish exchanges introduced in past years by both Republicans and Democrats. On both occasions the JLC opposed that legislation. There has also been legislation to convert Maryland to a “single payer” system of health care – also opposed by the JLC. While these legislative proposals were not successful, Maryland State officials have historically played an active role in seeking to control the delivery of health insurance. Beginning with the 2011 session of the Maryland General Assembly, they will certainly do so again.
Under the federal law, the exchanges have built-in advantages over producers in offering these products. For example, premium subsidies to individuals will only be available through the exchange. “Navigators” are established – and funded – to drive business to the exchange. The JLC must address these facts in its attempt to preserve the careers of MAHU and NAIFA-MD members, and all Maryland insurance producers.
The inescapable fact is that Maryland insurance producers in the future will have to deal with this powerful new competitor that has been created by our government. It is the job of the JLC to advocate for appropriate safeguards that will prevent institutions, such as the insurance exchange, from taking the business that over 22,000 licensed Maryland health insurance producers provide and service for their clients today and every day.