Despite the best efforts of one of the General Assembly’s most powerful legislators, the Georgia Senate stalled a controversial bill seeking minimum commissions for insurance agents on the final night of the 2016 General Assembly session.
House Bill 838 was the idea of House Rules Chairman John Meadows, R-Calhoun, an insurance agent whose committee decides which bills are allowed to be put up for a vote by his chamber.
It would have guaranteed a minimum 5 percent commission for agents who sell group health policies to small businesses. It also would set a 4 percent minimum commission for individual health benefit plans.
The bill easily passed a House committee that includes several agents, and it won overwhelming support in the full House.
But it stalled in the Senate after the The Atlanta Journal-Constitution raised questions about the fact that a bill to guarantee payments to agents was being pushed by a powerful insurance agent. After some Senate Insurance Committee members recused themselves from voting on the issue because they are in the insurance business, Meadows made it clear that Senate bills would have a hard time getting through his committee.
It eventually passed the Senate Insurance Committee, but the full chamber didn't take it up on the final day of the session, even though it was originally scheduled for a vote.
Meadows made trips to the Senate on Thursday evening, talking to Senate Insurance Chairman Charlie Bethel, R-Dalton, and Senate Majority Leader Bill Cowsert, R-Athens, and industry officials worked the rope line outside the chamber for hours, trying to get the measure moving. All to no avail.
Republican lawmakers have long criticized government attempts to involve itself in the marketplace, particularly on wage issues. And the fact that the idea came from a powerful House leader who sells health insurance for a living raised conflict-of-interest questions.
Georgia’s conflict-of-interest laws are weak — some would say nonexistent. Members can recuse themselves from voting on issues when they have a conflict. Some do. Many don’t. And members don’t publicly investigate such conflicts. They generally only play out in the media.
The rules basically dictate that unless a bill solely benefits a member’s business, recusal isn’t necessary. House members recused themselves 18 times during the 2015 session, according to the most recent data available. In the Senate, members asked to be excused from a vote on seven occasions.
A legal opinion written by legislative counsel Wayne Allen also raised questions about the bill, saying it could be subject to a legal challenge. Allen cited case law dating to 1951, when the Georgia Supreme Court struck down a law allowing the Georgia Milk Control Board to set the price of milk because it violated the state constitution’s due process clause.
The courts, Allen wrote, have a long history of trying to prevent any intrusion by lawmakers into private business affairs without it clearly being in the public interest. And it was not clear, Allen wrote, that the courts would see Meadows’ bill as being in the public interest.
State Rep. Shaw Blackmon, R-Bonaire, who officially sponsored the measure for Meadows, said the bill was needed in part because the Affordable Care Act mandated that insurance companies spend at least 80 percent of the money they take in from premiums on health care costs and improving quality. The other 20 percent can go to administrative, overhead and marketing costs, and agents’ commissions are being cut as companies seek to keep most of that 20 percent.
Meadows and Blackmon said agents’ commissions have fallen in recent years.
“It is unfortunate this legislation is necessary,” Blackmon told the AJC in a statement.
“However, with respect to health care, we are in uncharted territory and free-market principles no longer apply the way they once did,” he said. “This simple solution would protect independent insurance agents from being denied compensation when providing this service to individuals and small businesses.”
Industry officials say they would continue working on the issue with companies in hopes of fixing the problem and getting a fair compensation system. If that doesn’t happen, they could come back next year with another bill.
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