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State Insurance Regulators Offer Insights to Ensure Success of Health Reform Effort

Source: NAIC

Posted on 11 Jan 2010

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Members of the National Association of Insurance Commissioners (NAIC) are urging Congress to refine their proposals to overhaul the nation's health care system. State insurance regulators say American consumers will benefit most from reform that ensures continued consumer protection and oversight of health insurance policies at the state level.

The NAIC notes current House and Senate bills would:

* Extend guaranteed issue protections to the non-group health insurance market.

* Eliminate pre-existing condition exclusions and annual and lifetime limits.

* End the practice of rating policies based upon gender and health.

“The NAIC supports these measures, if they are paired with an effective individual mandate to mitigate the risk of adverse selection,” said NAIC President and West Virginia Insurance Commissioner Jane L. Cline in a letter to House Speaker Nancy Pelosi (D-CA) and Senate President Harry Reid (D-NV). “We also support the creation of state-based health insurance exchanges to streamline the process of purchasing coverage and make meaningful comparisons of health insurance plans much easier.”

In the letter, NAIC members urged Congress to:

* Oppose the creation of a new federal Health Choices Commissioner and Health Choices Administration. Instead, regulators recommend health insurance exchanges be established and administered at the state level with the flexibility to meet the needs of local markets and consumers.

* Ensure that all group policies be subject to the bill’s reforms at the end of a five-year grace period and ensure that any risk adjustment be applied to both grandfathered and newly-issued policies.

* Impose stronger penalties under the individual mandate provisions.

* Avoid any provision that could separate the regulation of premiums from the regulation of solvency.

* Allow the federal government to quickly shut down fraudulent multiple employer welfare arrangements (MEWAs) that falsely claim to be exempt from state regulation.

* Ensure that the effective dates of provisions in the new law are coordinated with implementation of the individual mandate and subsidies in order to mitigate the risk of adverse selection.

* Insist that nationally-sold plans be subject to all statutes and regulations that apply to other plans being sold to the same population and that they remain subject to the oversight of state insurance regulators.

The NAIC also urged legislators to address health care costs, warning that unless spending is brought under control, all of these reforms will shift the financial burden from one group to another without reducing overall cost.