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State insurance regulators will focus on retaining their authority as the Affordable Care Act is implemented, former Sen. Ben Nelson (D-Neb.), the new head of the organization that represents insurance regulators in the country's states, territories, and the District of Columbia, said Jan. 23.
Speaking at a media briefing, Nelson and other state officials said issues concerning online health insurance exchange markets that will open Oct. 1 under ACA are among the most important for state insurance regulators this year. Nelson, who was named chief executive officer of the National Association of Insurance Commissioners (NAIC) Jan. 22 after retiring from the Senate this year, said development of the new exchanges will have an impact on state-based regulation.
“Some states have embraced a state exchange; others have said they don't want to have a state exchange,” Nelson noted. “There's a diversity of opinion and positions within the NAIC, and the NAIC has been able to navigate very carefully through these differences of opinion to support both sides,” he said. “Uniformity is desirable in some cases, not achievable in all, and probably shouldn't be achievable in some.”
The Department of Health and Human Services has given conditional approval for 17 states and the District of Columbia to operate state-based exchanges, as well as conditional approval for two states to operate state partnership exchanges with HHS (see previous article).
Nelson stressed NAIC's position that states retain their historical power in regulating insurance. “It is not a system that is broken. It doesn't need to be scrapped. It doesn't need to be replaced,” he said.
A new Federal Insurance Office, created under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, will issue reports suggesting improvements to state regulation, which is “an appropriate relationship” between the federal and state governments, Nelson said. “There is no need for dual regulation.”
Adam Hamm, president-elect of NAIC, a standard-setting body for state insurance regulators, said, “Within our 50 states there are varying degrees of acceptance of various components of the Affordable Care Act.” Hamm, a Republican, is North Dakota's insurance commissioner.
“What you're going to see here over the course of 2013, as we build up to that initial open enrollment period for the exchanges on October 1, is the states working together and with the federal government where we can to make sure that states, to the greatest extent possible, have the flexibility to try to make the Affordable Care Act reflect the unique characteristics of each of our own jurisdictions,” Hamm said. Plans sold in the exchanges will take effect beginning Jan. 1, 2014.
Last summer, NAIC created the Health Care Reform Regulatory Alternatives Working Group to be “the focal point for states that are pursuing regulatory options outside of the Affordable Care Act,” Hamm said. The group, which will be chaired by Wisconsin Insurance Commissioner Ted Nickel, met Dec. 1 at the NAIC's fall national meeting in Oxon Hill, Md. (see previous article).
NAIC “is not picking sides on this issue,” said Michael Consedine, Pennsylvania's insurance commissioner and vice chairman of the working group. Consedine is secretary-treasurer of NAIC. The group is “serving as a resource for the member states, regardless of the direction they're going,” he said.
Pennsylvania and North Dakota will have federally facilitated exchanges (FFE) because they are not setting up their own state-based exchanges, Hamm and Consedine said. Under ACA, an FFE will operate in states that do not create state-based exchanges or state partnership exchanges approved by HHS.
States that will have the FFE are focusing on its potential impact on their markets and the impact on their regulatory authority, Consedine and Hamm said. “The last thing we need in America is dual regulators, or federal regulation, of insurance,” Hamm said. “In any way, shape, or form that we can prevent that or ward that off, we want to see that happen.”
Nelson, who voted for ACA in the Senate, said Congress's intention was for states to retain their regulatory role through state-based exchanges. “The discussions for having state-based exchanges as an option for the states was to assure that the states would have that role” of primary regulator, he said.
“There was never really any intent for the federal government to assume any role, except by default or at the request of the states,” Nelson said. But he said it was not clear if the law was written to prevent subsidies from being issued through federal exchanges, which the Oklahoma attorney general has claimed in a lawsuit over the law (see previous article). “I don't think it ever got quite that specific,” but “there are some levels of uncertainty,” he said.
“We're waiting really to understand at this point what a federal exchange will look like,” Consedine said, adding that state officials need to prepare consumers for the changes ahead. “There's still a lot of confusion and uncertainty as to what an exchange is, how it's going to work, is it going to result in lower premiums, what level of choices are they going to have.”
There are questions as to “who's doing what,” particularly regarding qualified health plans (QHPs) that will be sold in the exchanges, Consedine said. There are questions about the state role in approving the products, and what expectations are for states in enforcing ACA, he said. States have budget constraints, “so we don't have a ton of people to be answering phone calls that are invariably going to come as people start to have questions,” he said.
NAIC can serve as a resource for expertise, William White, commissioner of the District of Columbia's Department of Insurance, Securities and Banking, said. All jurisdictions “have some role to play in terms of what they're going to do in response to the ACA,” he said. The district plans to operate a state-based exchange.
Hamm said NAIC officials were not pushing for the Obama administration to delay implementation of ACA. “As states, what we need to do is work with what's in front of us and not worry about hypotheticals or what potentially the administration's going to do,” he said.
Nelson was director of the Nebraska Department of Insurance in 1975. He was executive vice president and then president/CEO of Central National Insurance Group from 1977 to 1981 and served as executive vice president and chief of staff of NAIC from 1982 through 1985.
As CEO of NAIC, Nelson said he will receive a base annual salary of $950,000, under a two-year contract. He said he will not be a lobbyist, in accordance with federal law barring government officials from lobbying during a “cooling off” period. He will oversee the NAIC staff of about 450 in Washington, Kansas City, Mo., and New York City.
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