NU Online News Service, July 16, 3:38 p.m. EDT

WASHINGTON–The National Association of Insurance Commissioners has written key House lawmakers telling them that a plan to create a federal agency for health care insurance oversight would be costly and unnecessary.

NAIC's letter to the chairs of three House committees objected to Sec. 141 of the "committee print" of the health care reform bill now going before various panels for the discussion and amendment process known as mark up.

Under that provision, a Health Choices Administration would be created as an independent federal agency headed by a commissioner appointed by the president.

The agency would have market conduct oversight authority as well as authority to establish standards for operation of the government run "public plan" health insurance option that is part of the House bill.

It would also have authority to establish standards for qualified private plans and oversee a health insurance exchange that would be created to serve as an Internet-based clearinghouse for health insurance information and choices.

The House Ways and Means Committee was meeting today to mark up provisions of the legislation dealing with financing of health care reforms proposed by the legislation, H.R. 3200, "America's Affordable Health Choices Act."

The House Energy and Commerce, and Education and Labor Committees will then mark up their portions of the legislation next week.

The plan is to have the bill ready for floor action by next Thursday.

In a letter to the chairmen and ranking members of each of the House committees drafting the final measure, the NAIC argues that the new entity would merely add more regulation and cost "without enhancing consumer protection."

The letter was signed by Sandy Praeger, Kansas Insurance Commissioner and chairman of the NAIC Health Insurance and Managed Care Committee.

The letter cited the "egregious failures" created by the inability of the Centers for Medicare and Medicaid Services to properly oversee marketing of Medicare Advantage plans.

In that case, Ms. Praeger said, 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."

Ms. Praeger said the NAIC believes that a single federal blueprint is unlikely to be effective in every state because "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."

Another problem, Ms. Praeger said, is that the House bill gives the proposed federal director no guidance in the legislation as to the content of standards, "making it probable that these standards would change dramatically with each new administration."

In the letter, Ms. Praeger also warned that healthy consumers may opt to pay the modest annual penalty in lieu of purchasing health insurance at a much higher premium.

That would cause "adverse selection that increases the cost of coverage for all and defeating the purpose of the requirement that all Americans obtain coverage," the letter said.

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State Regulators Object To U.S. Health Care Oversight Agency

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