Interstate Compact Vote Due Soon, But Major Questions Persist
Just two weeks before regulators vote on what they say is the answer to a need for a single point of product filing, insurers and consumer representatives say they still have questions about the interstate compact project.
During the fall meeting of the National Association of Insurance Commissioners here, major points–including the right of a state to opt out of compact product standards, the quality of standards chosen for long term care products and the role of consumer advocates–were raised. This was despite Michigan Insurance Commissioner Frank Fitzgeralds assertion that the project is coming down to “the end game” with fairly few changes likely. Fitzgerald heads up the interstate compact working group.
The issue of regulatory opt-outs–such as the right of a state to opt out of following compact standards for long term care insurance products and establish its own standards–was a concern voiced by Patricia Parachini, a representative of the American Council of Life Insurers, Washington. Although she noted ACLIs support for the project, Parachini says ACLI wants LTCI to be uniformly available in every state and an opt-out provision could “dampen” enthusiasm for the compact.
The need for stronger opt-out requirements was also raised by William Anderson, a representative of the National Association of Insurance and Financial Advisors, Falls Church, Va. Anderson told regulators that stronger reasons are needed for a state to opt out of requirements of the compact. Eliminating the opt-out would be a better option, according to Anderson.
However, he noted the political reality of trying to get states to sign on to the compact. Still, he continued, such opt-outs would make it more difficult for uniformity to be achieved.
Front-end opt-outs for LTCI were also a concern raised by Ann Henstrand, a representative with MetLife, Inc., New York. MetLife is also seeking ongoing commitment from commissioners on speed-to-market issues through statutory, regulatory or administrative means, she said.
Consumer representatives expressed concern over how LTCI is included in the compact, but for different reasons than those of insurers. There is potential through the compact for raising standards across the country if regulators revisit standards in existing long term care models and incorporate the strongest standards in the compact, according to Bonnie Burns, a representative with California Health Advocates, Scotch Valley, Calif.
If the compact is going to provide uniform standards, it is only fair to consumers that such standards be strong, she said. Failure to establish strong standards could create the need for changes five, 10 or 15 years down the road, said Burns, adding such changes are not retroactive.
Establishing strong standards for LTCI is important because “it is too important to the future of people buying it,” Burns said.
Funded consumers including Mila Kaufman, a Georgetown University professor, noted the importance for the compacts commission to have consumer representation. Many consumers do not lodge complaints with regulators and, consequently, a consumer representative would be able to bring a perspective of consumer needs to the commission, she continued. Such a position should be independent and not salaried, she added.
The accountability of the organization that is being created is one reason that AARP has strong concerns, according to Van Ellet, a representative of the American Association of Retired Persons, Washington.
A funded consumer position could complement a possible consumer panel, said Alice Weiss, a representative of the National Partnership for Women and Families, Washington.
Legislators were not averse to opt-out language in the original compact draft, but have not been asked about the newest drafts opt-out language, said Sue Nolan, deputy executive director of the National Conference of Insurance Legislators, Albany, N.Y.
In meetings earlier this year, including a meeting of the Denver-based National Conference of State Legislatures just before the summer NAIC meeting, legislators underscored the importance of being able to opt out of a compact decision, thereby retaining state sovereignty.
Terri Vaughan, NAIC president, said she could not predict how regulators would address the opt-out issue. On the issue of LTCI standards, Vaughan said it is possible for strong standards to be put in place in the NAICs adoption timeframe.
The NAIC hopes to adopt the compact draft in two weeks so that it can advance the project in state legislatures in the 2003 legislative session starting in January.
Strong LTCI standards are possible, Vaughan continued, because NAIC can work with people who have been involved in LTC regulations and are knowledgeable in this area.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 16, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.