The Power of PIA Advocacy
By Jon Gentile
Having already reviewed the various legislative and regulatory advances notched by PIA National across a variety of issues, late in December 2019 there were several additional accomplishments that occurred as Congress rushed to adjourn for its Christmas and New Year’s break.
The last item Congress had to pass before getting out of town was a financing measure to keep the federal government operating. These omnibus, “must-pass” budget bills regularly get amended with a host of unrelated bills that are added—like ornaments on a Christmas tree—and also passed as part of the overall package.
That’s exactly what happened in the final days of 2019, with three of PIA’s policy priorities added to the federal government funding package (H.R. 1865). The final budget bill passed by Congress and signed by President Trump included an extension of the National Flood Insurance Program (NFIP) until September 30, 2020; the permanent repeal of the healthcare Cadillac Tax; and an extension of the terrorism risk insurance program (referred to as TRIA) through the end of 2027.
This was a triple win for independent insurance agents. Along with a wide range of other policy advances in 2019 [“A Successful Year in Advocacy for PIA Members” PIA Connection 2019 V12], these three victories vividly illustrate the power of PIA advocacy.
“This was a triple win for independent insurance agents.”
These accomplishments would not have been possible without the constant engagement of PIA members, who participate in our grassroots campaigns, engage with their members of Congress in their home districts, contribute to PIAPAC, and participate in our annual congressional fly-ins—now called PIA Advocacy Day—taking the PIA message directly to the halls of Congress.
While we scored numerous wins in 2019, our work must go on in 2020. In the meantime, here’s a summary of our end-of-the-year triple play:
Flood Insurance Program Extended Nine Months
The National Flood Insurance Program (NFIP) has been extended until September 30, 2020 as part of the federal funding package. The program is currently on its 15th short-term extension since its last long-term authorization expired in 2017.
PIA National has worked tirelessly to ensure the NFIP does not lapse and that it receives a longer extension. To that end, PIA National spent the fall encouraging policymakers to extend the program more than a few months. We were pleased our efforts paid off, and the program was extended for more than nine months, to September 30, 2020, as part of the federal funding package.
While it’s disappointing that the program will again be extended on only a short-term basis, PIA is hopeful that the nine-month reauthorization will provide us with more time to work with Congress to ensure the ultimate passage of a robust long-term reauthorization that includes needed reforms. Such a bill already exists and has advanced on a bipartisan basis in the House.
In June 2019, the House Financial Services Committee unanimously passed a PIA-supported long-term reauthorization of the program with necessary reforms. The significance of this legislation passing unanimously in this committee cannot be overstated – every Republican and every Democrat present voted ‘yes.’
Notably for PIA members, this bipartisan reauthorization did not include a provision that would lead to a cut in agent commissions. PIA members may recall that a deal in 2017 that included such a cut was rejected by PIA National, the only agent association to take such a stand. We were pleased the 2019 House NFIP legislation did not include such a provision, and this was largely due to the intensive lobbying efforts by PIA National and PIA members around the country.
Unfortunately, there’s a bill in the Senate that still has such a provision. PIA opposes that bill and strongly supports the House Financial Services Committee-passed legislation and will continue to advocate for its passage in the House and Senate in 2020.
Cadillac Tax Repealed
PIA National was able to obtain a major victory in the funding package on a health care issue on which we’ve been lobbying for years: the repeal of the “Cadillac tax,” an onerous 40 percent excise tax on certain employer health plans. Enacted as a part of the Affordable Care Act, the Cadillac Tax has never been implemented, due in large part to advocacy by PIA members, who have led multiple successful efforts to delay it, most recently until 2022.
The tax would have applied to employer health plans and tax policies with limits that exceed the annual thresholds of $11,100 for individual coverage and $29,750 for family coverage. The Cadillac tax would be assessed using the chained consumer price index (CPI), which means the threshold coverages subject to taxation would increase more slowly. This would subject a greater number of Americans to the Cadillac tax sooner, because healthcare inflation will outpace increases in the thresholds using chained CPI.
“The Cadillac Tax has never been implemented, due in large part to advocacy by PIA members.”
The urgency to prevent the Cadillac tax from ever being implemented was due to the devastation it would have inflicted on the employer sponsored health system. While proponents of the tax claimed only the very wealthy would be affected, several studies, including one by Forbes, found that, while only 15 percent of employer-sponsored plans would be subject to the tax when it initially went into effect, the percentage of affected plans would have quickly increased. Five years after it began, nearly half of all employer-sponsored plans would be subject to the tax.
After ten years, over 70 percent of employer-based plans would have been exposed to the tax. In addition, the tax would have particularly penalized employers with high costs due to disabled workers, high-cost cancer cases, high cost-of-living areas, number of employees, and employers in specific industries, like manufacturing. In response to these concerns, employers were forced to draw up plans to cut or drop plans whenever the implementation date grew closer.
The Cadillac tax was a component of the Affordable Care Act (ACA). It was an attempt to dismantle the employer sponsored health system and generate revenue to finance the government-backed ACA, into which displaced insureds could then be directed. The ACA not only set up its own system for health insurance, but by including the Cadillac tax provision, it was also an attempt to simultaneously rip apart the private sector system of employer sponsored healthcare.
“Without PIA engaging in diligent years-long advocacy to lay the groundwork, the permanent repeal of the Cadillac tax in December 2019 would not have happened.”
The repeal of the Cadillac tax had long been a priority for PIA National, and was a top priority at our annual congressional fly-in each year. PIA National helped develop legislation, the Middle-Class Health Benefits Tax Repeal Act, to repeal it and actively advocated in favor of it for years.
Our efforts first paid off in the summer of 2019 when the bill passed the U.S. House in July, setting the stage for its inclusion in the year-end funding package in December 2019. Without PIA engaging in diligent years-long advocacy to lay the groundwork, the permanent repeal of the Cadillac tax in December 2019 would not have happened.
TRIA Reauthorized for Seven Years
The federal funding package also included one of PIA National’s most important policy priorities: a seven-year reauthorization of the terrorism risk insurance program (TRIA) without substantive changes. PIA National has been actively advocating for the long-term reauthorization of the TRIA program and we’re pleased this has been accomplished more than a year before its scheduled expiration of December 31, 2020. The new expiration date is December 31, 2027.
Following the terrorist attacks of Sept. 11, 2001, the property/casualty sector of the insurance industry determined that it could not sustain an additional terrorist attack without the nation’s economy suffering serious financial consequences. PIA took a leadership role in the weeks after the attack, as our industry coalesced around the effort to draft legislation. As a result, in 2002, the Terrorism Risk Insurance Act (TRIA) was signed into law, creating the program to provide a critical insurance backstop. PIA attended the bill-signing ceremony in the East Room of the White House, at the invitation of President George W. Bush.
The TRIA program fills a large void in the market and provides a level of certainty in an uncertain time. TRIA provides a federal backstop for commercial insurance losses from terrorist acts, making it easier for insurers to calculate their maximum losses for such a catastrophe and thus to underwrite the coverage. From its inception, the program was designed as a terrorism risk sharing mechanism between the public and private sector—with an overwhelming share of the risk being borne by private insurers, a share that has increased steadily over time. Today, all but the very largest (and least likely) terrorist attacks would be financed entirely within the private sector. The program has since been reauthorized in 2005, 2007, and, most recently, in 2015.
The 2015 TRIA reauthorization was acrimonious, and the program lapsed for nearly two weeks before being reauthorized until December 2020. Due to that experience, PIA National spent several years educating members of Congress on the importance of the program. This ongoing advocacy paid dividends, as in December 2019 the program was reauthorized for seven years in an overwhelmingly bipartisan manner, over a year in advance of its scheduled expiration.
While the 2015 re-authorization included several changes to the program, PIA National has advocated for as straightforward a reauthorization as possible. We were successful in this endeavor, as the bill included only two noncontroversial additions: a requirement that the Treasury Department assess the availability of insurance for houses of worship, and a request to the Government Accountability Office (GAO) to evaluate the potential costs of cyber terrorism, a risk that has not historically been addressed in the program. The TRIA program is essential for ensuring terrorism does not risk destroying our economy should an attack occur.
Jon Gentile email@example.com is Vice President of Government Relations for PIA National.