Texas Secedes! And Other Takeaways from the Final NAIC Votes on ACA Implementation Issues

Yesterday the NAIC Executive Committee and Plenary had their final call for the year.  They had a long agenda, including passing a Model State law to create an insurance Exchange and Model Laws to implement ACA’s early insurance reforms (such as elimination of pre-existing condition exclusions for children, dependent coverage up to age 26, and restrictions on annual limits).  They also had to recommend to HHS a consumer-friendly insurance glossary and standard summary of benefits form, as well as the standard form for health plans to submit if they propose an “unreasonable” rate increase.

It was a lot of ground to cover, and many of these issues have raised a lot of controversy over the last few months.  But the NAIC rose to the occasion and adopted all of the pending models and forms.  And they were adopted almost unanimously.  The one holdout was, of course, Texas.  Never mind that the NAIC models are simply a reflection of the minimum requirements under federal law – Texas has decided it will go its own way.  The representative from Texas told the NAIC:  “We’re going to take a different approach that is more favorable to Texas.”  It will be interesting to see how this plays out – especially since the ACA requires HHS to step in if a state is unwilling or unable to enforce the federal law.

The Commissioners also beat back a last minute amendment put forward by America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association (BCBSA) to “simplify” the rate review justification form.   The NAIC agreed to recommend the form to HHS without including the change they wanted and it’s now up to HHS to put forward a definition of what is an “unreasonable” rate increase and finalize the information plans will have to provide to justify it.  The HHS regulation should be published any day now.

Last but not least, in a sign of the political influence of insurance brokers, the NAIC is forming a high-level “Task Force” with the responsibility of recommending options for addressing the ACA’s “negative impacts” on brokers because of the new Medical Loss Ratio (MLR) requirements.  Under the new rules, health plans have to spend a minimum of 80% of premiums on health care, leaving only 20% for “administrative costs,” including broker’s fees.  As a result, many brokers are worried about losing income and have been lobbying insurance commissioners and legislators for some relief.

The NAIC’s work for the year is done, but there’s lots more to tackle in 2011.  While we will have a new crop of – mostly conservative – insurance commissioners next year, we also have a new crop of consumer representatives coming in.  A mix of hardy veterans and new patient and consumer advocates, the consumer reps will be working hard to make sure the NAIC is meeting its obligations to “protect the public interest” and “facilitate the fair and equitable treatment of insurance consumers.”