Without significant attention to the problems with state insurance regulation, momentum will build in Congress to create consistency, clarity and fairness, the president of AAHP-HIAA says.
In comments addressed to the National Association of Insurance Commissioners, Karen Ignagni says that while health insurers appreciate the NAICs commitment to improving the system, the reality is that for health insurers and managed care firms, insurance regulation is neither modern, consistent or, in many cases, workable.
“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 says.
Moreover, she says, while she is confident 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 says, 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 says.
Ignagni cites 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 says 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 says.
In addition, she says, NAIC must address the extremely high cost of both market conduct and financial exams.
Ignagni also says that the lack of uniformity, such as disparate definitions on 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 says.
In the area of external review, Ignagni says more than 40 states have requirements of some kind, but unfortunately, each state has a different variant on the theme.
Moreover, she says, even the NAICs 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 says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 6, 2004. Copyright 2004 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.