Groups Prepare for Insurance Hit

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These are fretful days for Stan Schuck. Like countless nonprofit business leaders nationwide, the president of the Philadelphia-area Main Line Chamber of Commerce is busy soothing a membership reeling from historically high unemployment and foreclosure rates, the prospect of higher taxes and less revenue in a prolonged down economy.

Schuck, too, might soon be singing the blues. As Congressional leaders and the White House finalize an overhaul to the domestic health care system this month, Schuck and other trade association executives are worried about how Democratic-proposed changes may eviscerate a major moneymaker for their organizations: the sale of health insurance plans.

“If they go to a public option or a co-op, those will go away,” Schuck said of his organization’s health insurance offerings. “We’re preparing for that. We’re looking for other revenue sources.”

According to interviews and a Roll Call analysis of tax records, some of the business community’s most vocal opponents to Democratic health care legislation also appear to have a substantial stake in the health insurance system. National groups such as the National Federation of Independent Business, Associated Builders and Contractors Inc., and U.S. Chamber of Commerce affiliates offer health insurance plans to their members, with some groups raking in substantial profits from the sale of policies. Exactly how much trade associations stand to lose overall from current proposals is unknown, as groups were understandably reluctant to discuss their own financial interests.

Internal Revenue Service disclosure requirements and the fragmented, state-regulated health insurance business also make it difficult to discern trade associations’ overall exposure to the market disruptions, but it may be dramatic.

While the overall impact to trade groups is opaque, the effects look grim for Schuck’s group, one of 283 “accredited” Chamber of Commerce affiliates across the country.

The Main Line Chamber of Commerce had $1.1 million in revenue in 2007, according to its most recent tax filing available at GuideStar.org. Of that total, almost $500,000 came from membership dues and investments, while $652,759 was raised from publications, seminars and other “program service revenue,” according to its IRS tax filing.

Of that total, the Main Line Chamber of Commerce made about 30 percent of its overall revenue, $326,875, from the sale of insurance. According to the organization’s Web site, the chamber affiliate offers medical, dental and vision benefits through the Philadelphia-based administrator USI Affinity.

“For competitive rates, high-quality customer service and an all out advocate for our members, employees and staff, you owe it to yourself to check out USI Affinity,” reads an endorsement bearing Schuck’s name on USI Affinity’s Web site.

Schuck also says his organization offers a prescription drug card that nets a 1 percent return on purchases by its members. Perhaps offering a rare glimpse into the complicated finances of many business groups, Schuck also explained how many local chambers of commerce have even more substantial insurance businesses.

“Some chambers are actually brokers — they broker to their members, they maintain the staff,” he said. “Other chambers act as marketers. They work with a broker who offers a really good package to their members and get the benefits of being involved in a larger group.”

If current Democratic proposals make it to President Barack Obama’s desk, Schuck is not expected to be alone among business group leaders who will be scrambling to fill holes on their balance sheets.

According to tax records, the Montana Chamber of Commerce made roughly 10 percent of its revenue from the sale of health insurance in 2007. The group, which lists its health insurance offerings on its Web site, raised $814,694, $82,092 of which came from a “member health plan,” according to tax documents available on GuideStar.org.

Montana chamber President Webb Brown said a loss of insurance revenue is “one of the reasons the public option is a concern for us.”

“We’re all about competition and offering some alternatives that some people haven’t had before, but if the weight and force of government to negotiate different rates with doctors, medical providers and others, that could put us at a disadvantage,” Brown said.