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Insurance Commissioners: Health Reform Will Not Limit State Oversight

John Commins, for HealthLeaders Media, March 23, 2010

Executives with the National Association of Insurance Commissioners say they're pleased that the healthcare reform package President Obama is expected to sign into law today retains states' oversight for their own insurance markets.

"We believe state insurance regulators are best equipped to educate consumers, field complaints, and regulate insurers," NAIC President Jane L. Cline, who is West Virginia insurance commissioner, told reporters at a media availability Monday afternoon. "So, we are pleased that the federal legislation preserves that role and does not create a federal commissioner shifting oversight to Washington, D.C."

Kansas Insurance Commissioner Sandy Praeger, chair of the NAIC Health Insurance and Managed Care Committee, said the provision to create multistate compacts by 2016 that would allow consumers to purchase insurance across state lines is workable "as long as states come together and agree on what the rules will be for those interstate sales via a compact."

"Consumers are still protected and the markets in those states would still be protected because they would be playing by the same rules. Selling across state lines absent a compact could destabilize the market," Praeger says.

Even though the compacts would be well-regulated, Oklahoma Insurance Commissioner Kim Holland, the NAIC secretary-treasurer, said she's not sure how many states would be willing to compromise on their health insurance benefits structures.

"It is likely that there won't be many of these compacts formed because you are going to have to harmonize the benefits structure and the products," Holland said.

"What we are talking about are mandates for coverage. Those are developed through the legislative process within a jurisdiction that is driven by consumer interest and a response by legislatures and it is difficult to pass them," Holland said. "The idea that a state would just give up the legislation that has been passed based on consumer need and interest and legislature response seems remote to me."

Cline said states share about 200 interstate compacts on a wide range of issues, but that health insurance creates a new set of challenges. "The difference here is you are dealing with an insurance product that is about providing healthcare, and healthcare delivery systems are generally local. It makes it a little more tricky," Cline says.

Under reform, Holland said the federal government would establish a "floor" for benefits within a compact, and that states could fashion there own benefit levels.

"Conceivably you could have states that have over time added numerous mandates to the scope of their benefits that might be interested in offering an alternative to consumers in their state that were lower cost, and agree that some other options with fewer of those mandates be available, and that could be done through the compact," she said.

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