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NAIC Hails Reform Effort, Strongly Objects to Unnecessary Federal Preemption of State Authority

Source: NAIC

Posted on 17 Jul 2009

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While hailing reform efforts, the National Association of Insurance Commissioners (NAIC) on Wednesday called on lawmakers drafting landmark health reform legislation to preserve the flexibility that states need to ensure that laws and regulations meet the needs of the individual states where consumers purchase coverage and receive medical care.

In a letter to the chairs of three panels in the U.S. House working on the bill introduced yesterday, state insurance regulators told the trio that the creation of a Health Choices Commissioner and Health Choices Administration would add more regulation and cost “without enhancing consumer protection.”

Referring to “egregious failures” at the federal level to protect consumers, insurance regulators reminded the chairmen of the dangers of overriding state standards, citing the recent debacle in the Medicare Advantage program, where federal marketing guidelines, like those the Health Choices Administrator is tasked with creating under the bill, left “millions of seniors exposed to deceptive, fraudulent and abusive sales tactics that would have been prevented had the states been allowed to act.”

“A single federal blueprint is unlikely to be effective in every state since health care delivery systems, demographics, rural and urban mix, economies and labor markets are distinctive and regulations that fail to take those distinctions into account will damage markets and consumers,” said Sandy Praeger, Kansas Insurance Commissioner and Chair of the NAIC Health Insurance and Managed Care Committee.

Another pitfall cited by the states is that the proposed federal commissioner is given no guidance in the legislation as to the content of standards, making it probable that these standards would change dramatically with each new administration.

State officials also warned that healthy consumers may opt to pay the modest annual penalty in lieu of purchasing health insurance at a much higher premium, causing adverse selection that increases the cost of coverage for all and defeating the purpose of the requirement that all Americans obtain coverage.

“States remain at the forefront in developing innovative solutions to the most pressing problems facing our health care system,” Praeger continued, citing the 2006 Massachusetts law which is the template for the bill being drafted by the three House panels. “Together the federal government and the states can help provide greater access to health insurance at more affordable premiums for the American people. State regulators hope to work with Congress in the spirit of cooperation to improve this legislation and to enact comprehensive health reform this year.”

Though presenting their objections to the legislation, the NAIC applauded the chairs for seeking to “expand access to coverage, improve the quality of care and restrain the rapid growth of health care spending,” along with other “long-overdue reforms” to help consumers.