Washington

Emphasizing that state insurance commissioners will play a critical role in implementing federal health care reforms, President Barack Obama met a large contingent of regulators at the White House as part of their new partnership last week.

President Obama and Health and Human Services Secretary Kathleen Sebelius met with 35 of the 56 state and territory insurance commissioners on Sept. 22 to discuss implementation of the first provisions of the Patient Protection and Affordable Care Act.

While most provisions will not take full effect until Jan. 1, 2014, last week early protections went into force for new policies and renewed plans, including a ban on lifetime caps on health insurance benefits, extended-year child coverage, and a prohibition on excluding policyholders' minor children with pre-existing conditions.

National Association of Insurance Commissioners President Jane Cline of West Virginia said President Obama, who joined midway through the meeting, was "very clear that we [the NAIC] have an important role in this. It clearly has got to be a partnership with the federal government."

After the mid-term elections this November, some state commissioners may lose their jobs, but the institutional knowledge of the NAIC will allow continuity in implementing the reforms, the regulator group said at a press conference here following the meeting with President Obama and Secretary Sebelius–a former Kansas commissioner and NAIC president.

The NAIC, referenced heavily throughout the health care reform act, has by all accounts been working exhaustively to implement the reforms–particularly in regards to regulating medical loss ratio standards set by the new law.

MLRs are proving to be the stickiest wicket in implementing the early provisions of reform thus far, commissioners noted at the press conference. The law requires health insurers to spend a certain percentage of premiums–80 percent for individual policies and 85 percent for group plans–on actual medical care as opposed to administrative costs or profits.

The states want to be able to write the MLR regulation so it doesn't disrupt the market and force out insurers or their agents, but not so broadly that it doesn't conform to the law, Ms. Cline said. Indeed, commissioners have been hearing from a slew of companies writing in the individual health insurance market, threatening to drop out as they won't be able meet the minimum, NAIC noted.

Some states have MLRs in the 60s embedded in existing law, Ms. Cline noted. Iowa and Maine have already or will be asking HHS for a waiver for compliance, according to Iowa Commissioner Susan Voss. It was unclear how many other states may follow suit.

Florida Commissioner and NAIC Vice President Kevin McCarty said he would hold a hearing in his state to gather evidence of potential market disruptions, as requested during the meeting by HHS, and detail precise concerns in a few weeks.

Mr. McCarty said Jay Angoff–director of the Office of Consumer Information and Insurance Oversight at HHS, as well as the former insurance commissioner of Missouri–needs something more evidentiary than to hear about "amorphous displeasures" in the market.

"We might lose some of those players," Mr. McCarty said he had warned Ms. Sebelius. "There is a paradigm shift" with the passage of this law, he added, noting that some business plans won't be able to adapt.

The commissioners said HHS was not thrilled with a phase-in of MLR to 2014, as was discussed, but Kansas Commissioner Sandy Praeger, who chairs the NAIC Health Insurance Committee, said the law does give latitude for phase-in on a state-by-state basis to HHS. She said, however, that she can't imagine Ms. Sebelius spending time reviewing every state's progress, and so she is looking for flexibility from HHS.

The NAIC and some commissioners have a weekly call with HHS, so dialogue on implementation will be ongoing and more detailed guidance will be forthcoming.

Elizabeth Festa is a freelance journalist for Summit Business Media, parent company of National Underwriter.

Special Reports /

Obama, NAIC Launch Health Reform Partnership

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