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AAHP-HIAA Head Criticizes State Insurance Regulation

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NU Online News Service, Feb. 4, 2004, 1:32 p.m. EST, Washington – The head of AAHP-HIAA says state insurance regulators have to improve state regulation quickly.[@@]

Otherwise, momentum will build in Congress to create consistency, clarity and fairness, AAHP-HIAA President Karen Ignagni said earlier this week here at the annual meeting of the National Association of Insurance Commissioners, Kansas City, Mo.

Although health insurers appreciate the NAIC’s commitment to improving the system, the reality is that, for health insurers and managed care firms, insurance regulation is neither modern, consistent nor, in many cases, workable, Ignagni said.

“Over the years, many states have created an environment that fails to serve consumers by simply layering regulatory requirement over regulatory requirement with no real benefit to consumers, to regulators or to the industry,” Ignagni said.

Moreover, she said, while she is confident that the entire NAIC Executive Committee has a strong commitment to uniformity, it is critical that this commitment be shared by the staff who sit on the various NAIC task forces and working groups as well as by commissioners’ teams at home.

However, Ignagni said, to date that has not been the case.

“The reluctance to embrace a common objective of uniformity has been a major impediment to achieving regulatory reform at the NAIC,” she said.

Ignagni cited 4 areas that health insurers and health plans see as being of primary importance.

These include the market conduct process, the financial examination process, speed-to-market and external review.

Regarding market conduct, Ignagni said it is time to implement practices that adopt the best standards available, regardless of the past practices of individual insurance departments.

“If the NAIC is to be a leader in regulatory reform, then those reforms must be a race to the top, rather than an implementation of a patchwork of provincial procedures,” she said.

In addition, she said, NAIC must address the extremely high cost of both market conduct and financial exams.

Ignagni also said that the lack of uniformity, such as disparate definitions about what constitutes a “complaint,” makes it impossible for health insurers and plans to standardize and streamline their operations systems.

“Under the insurance regulatory system as it exists today, it is virtually impossible to craft a compliance system that works across state lines,” she said.

In the area of external review, Ignagni said that more than 40 states have requirements of some kind, but, unfortunately, each state has a different variant on the theme.

Moreover, she said, even the NAIC’s model has a variety of “options” rather than a single, consistent set of requirements.

“Overlapping, inconsistent and oftentimes conflicting regulations and interpretations do nothing but drive up the cost and therefore drive down the availability of health care,” Ignagni said.


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