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Regulators Warn Against Opening Loophole in Health Insurance Exchanges

The National Association of Insurance Commissioners (NAIC) is warning that the federal government should not create a loophole in the healthcare law that gives the...
August 23, 2011

The National Association of Insurance Commissioners (NAIC) is warning that the federal government should not create a loophole in the healthcare law that gives the nation's largest insurance companies regulatory advantages over their smaller competitors. The NAIC, in a letter to the U.S. Office of Personnel Management (OPM), also expressed concern about potential consumer implications of the new Multi-State Plans offered through the health 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.

"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," said the letter signed by NAIC President and Iowa Insurance Commissioner Susan Voss along with the NAIC President-elect, Vice President and Secretary-Treasurer. The NAIC urged OPM to require Multi-State Plans to meet all state laws and regulatory requirements.

Read more on NAIC's opinion on loopholes for health exchanges: NAIC Warns Feds of Risks in Multi-State Plan Program (NAIC 8/15/11)

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