With a vote looming in the Senate on permanent repeal of the estate tax, the group Responsible Wealth is conducting an aggressive campaign urging the Senate to reject permanent repeal.
Responsible Wealth is a Boston-based association of wealthy Americans who say they are concerned over economic inequality. Leaders of the group include Bill Gates Sr., father of the founder of Microsoft, and financier Warren Buffett.
Responsible Wealth recently ran advertisements opposing repeal in several newspapers, arguing that repeal would have a devastating impact on funding for Social Security, Medicare, education and homeland security, while benefiting less than 1% of the population.
“It is unfair and irresponsible to target tax relief to just 6,000 wealthy people at the expense of millions of hard-working taxpayers,” according to Chuck Collins, a co-founder of Responsible Wealth.
The group says that estate tax repeal would cost the nation $60 billion a year and have an adverse impact on charitable giving.
Indeed, the groups says, the Treasury Department estimates that repeal would cut charitable giving by up to $6 billion annually.
A vote on estate tax repeal is scheduled to take place before June 28, although a firm date has not yet been set.
However, under an agreement worked out between Senate leaders, a super-majority of 60 votes will be needed if permanent repeal is to prevail.
The vote is expected to be close.
In other news, the American Council of Life Insurers, Washington, says it will oppose Russias entry into the World Trade Organization unless Russia guarantees market access to foreign life insurance companies.
Brad Smith, managing director for international relations with ACLI, says that Russia has refused to commit itself to allowing market access for foreign life insurers, unlike China.
The current lack of commitment on market access in life insurance, Smith says, represents an unacceptable shortcoming in Russias bid to join the WTO.
“Opening the Russian life insurance sector will improve capital formation for domestic investment and credit, and will generally improve the quality and type of financial service products in the market,” Smith says.
“Russia must make a commitment to allow foreign life insurance companies to set up companies and control their operations if it hopes to attract foreign business and expertise,” he adds.
Smith says that ACLI hopes to continue its dialogue with Russian trade officials and will continue to work with U.S. trade negotiators to remedy the problem with Russias WTO bid.
In the health area, a dispute has erupted between the Blue Cross/Blue Shield Association (BCBSA) and an association of self-insured employers over proposals to establish association health plans.
Under the AHP proposal, employers would be allowed to pool together as part of a bona fide trade or professional association in order to provide health benefits to their employees on either an insured or self-insured basis.
AHPs would be exempt from state insurance regulation.
A report prepared for BCBSA compared AHPs to the multiple employer welfare arrangments (MEWAs) and argued that many of the same problems, such as fraud and underfunding, would occur.
“In recent months, more than 100,000 consumers participating in under-regulated insurance arrangements for small businesses have lost their health benefits,” says Mary Nell Lehnhard, senior vice president with BCBSA.
“Knowing this sad fact, it is ironic that Congress would consider legislation to foster proliferation of AHPs, exempt from state regulation and consumer safeguards, as a solution for the nations uninsured,” she says.
According to the BCBSA study, four out of five small businesses that receive coverage from an AHP would actually see their premiums increase.
The study says that proposed solvency and other standards for AHPs would not prevent problems, but could exacerbate them.
The current regulatory vacuum, the study says, would heighten the risk for fraud and insolvency.
“It is abundantly clear that exempting AHPs from state law is not the magic bullet to eliminate the struggles of small employers facing rising health care costs,” Lehnhard says.
But James A. Kinder, chief executive officer of the Self-Insurance Institute of America, blasted the study as “political propaganda designed to protect BCBSAs near monopoly in the small group health care marketplace.”
Kinder says that for most small employers, BCBSA plans are the only game in town.
“AHPs would provide these small employers with a choice, which is a threat to BCBSAs market share, so they have responded by putting out a report that attempts to scare people about the effects of competition,” he says.
Kinder notes that legislation permitting AHPs contains rigorous solvency standards designed to address problems associated with MEWAs.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 3, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.