Both the House and Senate healthcare reform bills include numerous references to state insurance regulators and the National Association of Insurance Commissioners, requiring consultation and coordination with the states on issues such as rate rules, guaranteed issue and the proposed insurance exchanges.

State insurance regulators have a long history of working with the federal government on health insurance-related issues—HIPAA and Medicare supplements immediately come to mind. But the healthcare reform legislation will take it to a new level simply because of the breadth of the issues and the compressed timeframe for implementation.

Whatever law is finally enacted will likely require the NAIC to develop new model laws, regulations and standards. It will also require the states to enact them within two to three years of the federal law’s enactment, and it will require the regulators, individually and through the NAIC, to perform ongoing implementation functions.

The bills require the U.S. Department of Health and Human Services and other federal bodies to consult with, coordinate with and collaborate with the states, state insurance regulators, the NAIC and others on a variety of reform initiatives. HHS Secretary Kathleen Sebelius, the former Kansas governor and insurance commissioner, would be required to:

  • Act in conjunction with the state insurance commissioners with respect to reviewing unreasonable increases in premium rates;
  • Consult with the NAIC in establishing permissible age bands for determining premiums for individual and small-group markets;  
  • Consult with the NAIC in developing uniform standards for summarizing benefits and explaining coverages in the individual and small-group markets;
  • Consult with the NAIC in development of uniform terminology and methodology for reporting certain premiums revenues and loss ratios; and
  • Consult with the NAIC to develop standards for exchanges and qualified health plans.

Additionally, states would have to be consulted in the development of coverage and benefits for qualified plans in the exchanges.

Although these terms—“consult,” “coordinate” and “act in conjunction with”—are ambiguous, it is clear Congress sees a significant role for the states in the implementation of healthcare reform.  Here are a few of the areas in the House and Senate bills the NAIC has identified as requiring state action and involvement:

  • Developing reinsurance standards for individual and small-group markets;
  • Developing minimum standards for state implementation of federal rating, access and marketing rules;
  • Developing standards for optional state compacts to allow selling individual insurance across state lines;
  • Developing new policy forms and premium rating adjustments to account for new guarantee issue rules, preexisting condition prohibitions and loss ratio standards;
  • Developing model marketing regulations;
  • Establishing rating areas;
  • Developing standards for exchanges, qualified health plans, reinsurance and risk adjustment; and
  • Establishing a temporary high-risk pool for certain individuals before the exchanges are operational.

Of course, because of the uncertainty surrounding the healthcare debate at press time, we do not know what a final bill will look like (or if there will be a bill at all), let alone what tasks will finally be delegated to the states. Nonetheless, the state regulators and the NAIC are quietly preparing for the implementation work ahead. The public phase of their planning began in December when the NAIC held a public forum on healthcare reform at its national meeting in San Francisco. The forum featured healthcare experts and Congress-watchers, as well as regulators and state legislators, all talking about what will be required of the states if and when the law passes.

Now, with the Democrats losing their filibuster-proof majority in the Senate, passage of healthcare reform looks uncertain, if not unlikely. The state regulators, however, still aim to press ahead, not only to be organized and prepared to take on the mandates if reform passes, but also to start addressing some of the substantive issues that are currently in the reform bills.

Whatever the outcome of the federal healthcare debate, we are likely to see some action at the NAIC and, eventually perhaps, in the states. If federal reform is enacted, the action will be swifter and more deliberate, and the pressure will be on all of us to keep up.

Whatever the outcome of the federal healthcare debate, we are likely to see some action at the NAIC and, eventually perhaps, in the states.