Bush Victory Could Mean Uphill Battles For Industry
With President George W. Bush winning a clear victory for a second term and greater Republican control of Congress, the life insurance industry probably will be facing some uphill battles.
Frank Keating, president of the American Council of Life Insurers, Washington, said in an interview the day after the election that the industry will have to work hard to persuade the new administration and Congress to support the life industrys agenda.
Republicans increased their number of seats while retaining control of the House, and it looks as if they will hold 55 seats in the Senate, up from 51 currently.
Many business groups are celebrating. But the Republican emphasis on tax cuts could hurt sales of life insurance products that offer tax advantages, and many Republicans, including 5 new freshman Republicans from the South, also may be slow and/ or unwilling to support legislation that would create an optional federal charter, Keating said.
Keating also said that the Republican agenda of tax cuts, which clearly are supported by the electorate, will return, including the issue of Lifetime Savings Accounts, which are anathema to the life insurance industry.
“I would assume that significant tax return will return, i.e., proposals for a flat tax, service sales taxes, cuts in income taxes, both corporate and individual,” Keating said. “These issues will be hotly debated in this new Congress,” he said.
“We welcome this debate, but we want to ensure that Congress understands that what ails America is too little savings, too little long-term savings and too little retirement security. We would just hope to be at the table to discuss those items.”
He said that lifetime savings accounts “are death to long-term savings and are terrible to Americas only long-term savings industry, and we will fight LSAs block by block and street by street.”
The American Benefits Council, Washington, also voiced some concerns, with President James Klein noting, “The election results are a mandate on national security, not health or retirement security.”
Pension and health care issues “were actually less of a focus for the candidates than anyone might have expectedespecially since the passage of major Medicare reform a year ago led us all to believe that health care would play an even more prominent role in the campaign,” Klein said.
His concern is that Mr. Bush will continue to pursue his agenda without Democratic support, even though he believes better policies are created when “the president and Republicans and Democrats in Congress find common ground.”
The Council of Insurance Agents and Brokers, Washington, says in a memo to members that there will be a wide range of employee benefit specifically, group healthissues that the new Congress and administration will attempt to deal with.
In the memo, the CIAB says President Bush “put a big focus this year on the enactment of association health plans to allow small businesses to pool their resources to expand purchasing power.”
The CIAB says many people in the benefits business believe that “AHPs would exacerbate existing problems of companies exiting the health insurance marketplace, increasing cherry-picking.
“Thanks to leaders such as [freshly reelected] Sen. Judd Gregg of New Hampshire [who chairs the primary committee of jurisdiction], AHPs have gone nowhere in the Senate despite several positive House votes in recent years,” the memo says. “It is too early to tell whether the election results will give legs to these proposals.”
The CIAB also says that the pressure for new health insurance mandates, or a trial-lawyer-friendly Patient Bill of Rights, “have decreased substantially.”
Keating lauded the presidents reelection, saying that, “Strong leadership will be required in the coming years and we believe President Bush will continue to provide it.”