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NAIC Urges Caution in HIX Regulations

John Commins, for HealthLeaders Media, August 16, 2011

The National Association of Insurance Commissioners is urging the federal government to avoid creating regulatory loopholes for health insurance exchanges that could give multistate plans significant advantages over their smaller, in-state competitors.

"Insurance Commissioners and the NAIC have serious concerns about the potential for market disruption and adverse selection, and the resulting negative impact on consumers and health insurance markets which would arise if Multi-State Plans are allowed to operate under different rules than their competitors," NAIC leaders said in a letter to Cheryl D. Allen, contracting officer for the U.S. Office of Personnel Management.

Starting in 2014, OPM will be responsible for contracting with at least two health plans that will be sold on every state's HIX as "multistate plans." NAIC said in its letter that language in the law could inadvertently create two sets of rules – one for larger multistate plans, one for everyone else."

The letter was signed by NAIC President and Iowa Insurance Commissioner Susan Voss, and co-signed by the NAIC President-elect, Vice President and Secretary-Treasurer. NAIC was responding to OPM's request for information as they draft guidelines for multi-state plans.

The commissioners warned that separate rules could threaten plan solvency and lead to market segmentation, consumer confusion and a loss of consumer protections. "We urge OPM to require Multi-State Plans to be subject to all fees and assessments levied by state Exchanges in order to finance their operating expenses," the letter said. "Allowing larger insurers a free-ride at the expense of smaller competitors would damage competition and could endanger the viability of Exchanges."

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