NAIC Would Fight Obama Plan For U.S. Insurance Rate Regulation

The National Association of Insurance Commissioners is ready to oppose any provisions in proposed health care reform legislation that would allow federal preemption of state insurance rate regulation, an official said.

Oklahoma Insurance Commissioner Kim Holland, the NAIC Secretary-Treasurer, said rate regulation is a prerogative of the states.

If White House health care reform proposals grant power to a federal rate authority to disallow increases approved by the states, Commissioner Holland said, “I think we would work hard to make a strong case to not do that.”

Yesterday the White House released a proposal by President Barack Obama designed to help bridge the gap between plans passed in the House and Senate.

The president’s plan would create a new “Health Insurance Rate Authority” that would provide “needed oversight at the federal level and help states determine how rate review will be enforced and monitor insurance market behavior.”

Commissioner Holland said the NAIC is in a “wait and see” mode at the moment and she had not yet seen the details of President Obama’s plan.

She is pleased, she said, that Health and Human Services Secretary Kathleen Sebelius is charged with engaging state regulators, as Ms. Sebelius has previously served as Kansas insurance commissioner and understands state regulation and authority.

Renewed attention has been given to rate regulation in the wake of the recent announcement by Anthem Blue Cross in California proposing rate increases of as much as 39 percent for individual health policies.

Commissioner Holland said a federal approach to address the rate increases should not be “one size fits all.” She said in Oklahoma, the individual market covers just four-and-a-half percent of residents, and there are 19 companies competing for that business.

She contrasted the Oklahoma market with California, where the individual market makes up a greater percentage of the health insurance marketplace but there are fewer companies providing that coverage.

She also maintained that rate increases cannot be addressed in a vacuum, but rather must be addressed alongside the rising costs of health care. “All pieces must work together,” Commissioner Holland said. She added, “You can’t beat the drum of rate increases without beating the drum of rising health care costs.”

Regarding rising health care costs, Commissioner Holland said there have not been discussions about hospital surpluses or Medicare fraud, for example. “There are a lot of issues causing dramatic cost increases,” she said.

She noted the NAIC will continue to judge reform proposals against the set of principles the association released early last month (online at http://www.naic.org/Releases/2010_docs/health_reform_insight.htm).