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Health Reform Proposals Will Make Matters Worse, Say State Regulators

John Commins, for HealthLeaders Media, February 26, 2010

Insurance commissioners from three states today expressed concerns that health insurance reform proposals put forward by Democrats and Republicans would destabilize state markets and create more problems than they're designed to solve.

Specifically, three members of the National Association of Insurance Commissioners sharply criticized a Republican proposal to allow consumers and companies to purchase health insurance across state lines and a Democratic plan to strip health insurers of antitrust protections.

Rep. Marsha Blackburn, R-TN, said at the White House healthcare reform summit on Thursday that allowing consumers to purchase health insurance policies that are regulated in other states would spur competition and lower costs.

"State lines right now basically have stop signs up when it comes to across-state-line access," Blackburn said at the summit. Removing those barriers, she added, would lower costs and "insurance companies accountable."

NAIC President Jane Cline, insurance commissioner for West Virginia, told reporters Friday that insurance companies already operate in multiple states. However, they must comply with each state's regulations and coverage mandates.

Kansas Insurance Commissioner Sandy Praeger, who is also chair of the NAIC's Health Insurance and Managed Care Committee, says states have long opposed allowing the federal government to strip them of a critical oversight tool.

"We lose a lot in terms of consumer protections," she told reporters. "Companies will seek out the states that have the least amount of consumer protections in their state laws, file their products there, get them approved, and then come back into my state."

Praeger says a federal mandate to strip states of the right to regulate policies and mandate coverage would likely have fewer benefits, and would thus be cheaper.

"Who do those appeal to? Younger healthier folks, people who don't think they need much insurance, but want some protections," she said. "That means the people who want comprehensive coverage will buy from our state-regulated plans, which will ultimately cost more."

"We are there to protect the market and to keep everyone playing by the same rules. This destabilizes and allows for adverse selection and cherry picking," she said.

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