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Friend Or Foe?

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Great rivalries pepper human history–Sparta and Athens; Montagues and Capulets; Red Sox and Yankees.

Whether federal lawmakers and state insurance regulators will join these ranks is rightfully receiving discussion as was witnessed during the fall meeting of the National Association of Insurance Commissioners in Washington. The issue surfaced several times during the gathering.

During the brand new legislative liaison meeting, State Sen. Delores Kelley, D-10th District, Md., called for more collaboration between state insurance regulators and legislators in light of the growing possibility of federal regulation.

“We are all under attack by the Feds,” Kelley noted. “We’re all in this together.” She added that if there are disagreements between state regulators and legislators, then “let’s have a fight in-house and quietly, and not in a public way that would harm us during a time of stress.”

Later during the discussion of state-federal relations, State Rep. Robert Damron, 39th District, R-Ky., echoed those words, stating, “The real enemy is across on the Hill. They love for us to fight and bicker and battle each other. Federal regulation of insurance is our opponent, not each other.”

During the session, Walter Bell, NAIC president and Alabama commissioner, said he doesn’t believe federal legislators are the NAIC’s enemy. “We work with Congress. We’d rather testify before friends than before enemies.”

So, who is right? Well, perhaps both are. And, perhaps, friend or foe is too simplistic.

More accurately, what everyone may be sensing, and reacting to, is a shift, or the possibility of major change.

Is change bad? Not necessarily, if it creates a more efficient market that benefits companies and offers consumers real protections. But change can be bad if it turns out to be nothing more than a poorly thought out power grab that is more bureaucratic than consumer-driven.

Is fear of change natural? You bet. Witness any animal’s response to a change in its surroundings (humans included.) Fear is just an early warning signal. So, then the question that is more to the point is whether this recently detected shift in thinking about how insurance should be regulated is rational or irrational concern. Should state legislators and regulators be circling the wagons?

That’s where a legitimate fear lies because at this point there is no definite answer.

Later in the meeting, several members of Congress talked about measures they were advancing that would depend on state participation in order to be successful.

Rep. Tammy Baldwin, D-Wis., and Rep. Tom Price, R-Ga., described a bipartisan bill they are proposing that would allow states to be “laboratories” for health insurance coverage solutions. H.R. 506, The Health Partnership Through Creative Federalism Act, would recognize that different states have different needs and would allow different ideas to be tried in specific states through grants that Congress would authorize to individual states, groups of states, or portions of states.

U.S. Congressman Tim Mahoney, D-Fla., detailed a bill, H.R. 3355, the Homeowners’ Defense Act of 2007. He co-sponsored U.S. Rep. Ron Klein, D-Fla. and he says it will make homeowners insurance more affordable while also being fiscally responsible. According to Mahoney, the program is totally voluntary for states. “If you want to participate, it is there,” he said.

If bills such as these are the measure, then the fear is probably irrational. If the measure is a system where state insurance regulators do not have the power to help consumers with issues such as health coverage and simply carry out the will of a federal bureaucracy, then the fear will be well-founded.


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