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Health Insurers' Plan to Expand Coverage Hints at Preemption of State Regulation

With the new Congress expected to tackle the issue of expanding health insurance to cover the uninsured, the health insurance industry has trotted out a...
November 22, 2006

With the new Congress expected to tackle the issue of expanding health insurance to cover the uninsured, the health insurance industry has trotted out a series of proposals it says would cover all Americans in 10 years. America's Health Insurance Plans (AHIP) unveiled a package of federal legislative proposals that calls for significant expansions of Medicaid and the State Children's Health Insurance Program, new tax credits, federal grants, and the establishment of a new financing mechanism called a "universal health account." The accounts would be portable to the individual, and employer contributions could be used either to purchase coverage offered through the employer, or coverage available in the individual market.

It appears that the new proposals include elements of the failed Association Health Plan (AHP) (S. 1955) bill that was defeated in the Senate earlier this year following strong opposition by a host of groups including the American Cancer Society, the American Association of Retired Persons (AARP), the National Conference of Insurance Legislators (NCOIL) and the National Governors Association (NGA). That bill would have removed the regulatory authority of a wide swath of the health insurance market from the states, placing it instead with the federal government. S.1955 would have allowed private insurers to bypass state regulations requiring coverage of things such as preventive cancer screenings, mental health care, diabetes supplies and routine women's health care. It also would have allowed insurance companies and small businesses to vary health insurance premiums for individuals and small businesses by preempting state insurance laws.

The announcement from AHIP says that their new proposal does not initially (emphasis added) dictate what types of health insurance products could be employed within the universal accounts, but then goes on to criticize state regulations that restrict the ability to, as they put it, "customize basic benefit packages."

What It Means to Agents:  Once again, health insurers seem to think that the way to expand coverage is to circumvent state insurance regulations. The new proposals tweak the AHP proposal, retaining elements that would permit substandard policies, while adding more government spending and shifting costs from employers to both the government and individuals.

PIA's position remains consistent: we strongly oppose federal regulation of insurance and strongly support state regulation of insurance.