FOR IMMEDIATE RELEASE
WARN AGAINST OPENING LOOPHOLE IN HEALTH INSURANCE EXCHANGES
Provision Could Erode Consumer Protections, Upset Markets
WASHINGTON, D.C. (August 15, 2011) — The National
Association of Insurance Commissioners (NAIC) this week urged the U.S.
Office of Personnel Management (OPM) to avoid opening a loophole that could
give some of the nation‘s largest insurance companies regulatory advantages
over their smaller competitors. The NAIC further expressed concern about
potential consumer implications of the new Multi-State Plans offered
through the insurance Exchanges if they are held to different standards.
Beginning in 2014, OPM is charged with contracting with at least two
health plans to be automatically sold on every state‘s Exchange as “Multi-State
Plans.” While the law clearly intended for these plans to operate on
a level playing field, language within the law could allow for two sets of
rules—one for large Multi-State Plans and one for everyone else. The NAIC
is concerned this provision may unintentionally upset state insurance
markets and erode consumer protections.
In a letter to OPM signed by NAIC President and Iowa Insurance
Commissioner Susan Voss states “Insurance Commissioners and the NAIC have
serious concerns about the potential for market disruption and adverse
selection, and the resulting negative impact on consumers and health
insurance markets which would arise if Multi-State Plans are allowed to
operate under different rules than their competitors.” The letter was
co-signed by the NAIC President-elect, Vice President and
The concerns raised by the NAIC are in response to OPM‘s request for
information as they develop the guidelines for Multi-State Plans. The
comments provided further detail of the potential market disruption should
Multi-State Plans be exempt from the rules that govern other plans offered
through an Exchange or in the insurance market as a whole. They noted that
separate rules could threaten plan solvency and lead to market
segmentation, consumer confusion and a loss of consumer protections.
The NAIC urged OPM to require Multi-State Plans to meet all state laws and
The comments submitted also explained that a second provision, intended
to ensure a level playing field, could paradoxically upend state consumer
protection laws if the Multi-State Plans are exempted from state
regulation. While Congress intended for Multi-State Plans to adhere to
applicable state regulations, as the law is written, if OPM exempts a plan
from applicable state regulation, by extension it also exempts all other
plans – both in and out of an Exchange - from those same regulations,
leaving a regulatory vacuum.
to view full text of the letter and the comments submitted.