Q: In Illinois, what challenges do you anticipate running into with upcoming health care reform provisions?
Michael McRaith: The biggest challenges we have in Illinois are the transition problems created by an industry that is underwriting more aggressively than ever, and pricing more aggressively than ever. Once we arrive at 2014 and the exchange is established and understood and pricing criteria are changed, we’ll see a much better health insurance marketplace. However, in this interim transition period, we are seeing some less responsible companies take full advantage of the current gaps in our regulatory system.
For example, in Illinois, we do not have the regulatory authority to approve or deny rate increases. We have seen companies imposing explosive rate increases on small employers and families, with the apparent intention of pricing those policyholders out of the market. In Illinois, also, individuals can be denied coverage or have certain conditions excluded for reasons that do not constitute a medical pre-existing condition, and we are seeing more aggressive denials by insurers and more aggressive exclusions from coverage.
Our first chore is to educate and engage the public and policymakers to help them understand all of the problems in our current health insurance market, and that the level of dysfunction in our current health insurance market needs to be corrected.
What Your Peers Are Reading
Q: Do you anticipate any administrative challenges with reform?
MM: Our biggest challenge administratively is collecting reliable information from the industry about how their business practices affect people in Illinois, and how many people in Illinois are affected by their business practices.
We believe that all of the reforms will improve the health insurance market in our state. Illinois, among all the states, stands to benefit more from the reform. We have an insurance market constructed to this point in a way that would satisfy the objectives of the 1970s into the early 1980s. We need to modernize our system of regulation and oversight in Illinois so that our employers and families, when they spend hard-earned dollars on a premium, get value in exchange for that.
Q: Is your state doing anything differently or preparing in any special way for health care reform?
MM: We certainly are focused on implementation in a timely and responsible fashion. We have a twofold objective: to protect consumers and promote competition. So that balance of consumer protection and promoting competition is the ultimate guiding objective for our department as we move toward the implementation of reform.
One challenge for us is to continue to promote and include insurance products in the purchase of health insurance. We’ve seen that health insurance can move toward limited compensation paid to the producer, and some companies are trying to eliminate compensation paid to the producer. While we believe the producer business model can and should evolve for small employer and individual health insurance, we also view the role of the producer as essential. Insurance producers are critical to ensuring that families and employers have plans that meet their needs, that are affordable, and that the companies provide that benefits consistent with the terms of the policy.
Q: For producers licensed to sell health insurance in your state, what developments might they look out for in the short-term? What should they be focusing on right now?
MM: I think from the producer perspective, the objective is always to provide value to clients, whether that client is an employer or a family. We know most producers are driven by that responsibility, providing value to their client. At the same time that the insurance producer is doing that, we strongly encourage them to understand that the marketplace is evolving, and through the course of that evolution, we need to preserve the important role that the producers play, and we view the producers through the transition and the continuing evolution of the business model as a part of this reform implementation process.
Many producers are small employers also, and understand the travails of our current system. At the same time that we’ve moved to improving the health insurance system for small employers, we need to preserve their role not solely to preserve the economic incentive for producers, but because the service that producers provide to their clients is so important.
Q: What did you get out of President Obama’s recent visit with several state regulators?
First, President Obama was able to talk about the technical aspects of the reform implementation with familiarity. I was very impressed by his ability to speak about the reform – and substantively about the reform.
Secondly, I was pleased and encouraged, but not surprised, to see that the president encouraged the regulators to implement the law fairly and reasonable and not in any way driven ideologically. And in that sense, I think it was an appropriate conversation to illustrate the ongoing partnership between the federal government and the states when it comes to the regulation of health insurance.
Prior to his appointment, Michael McRaith worked 15 years in private practice as an attorney in Chicago, representing national and regional financial institutions, including insurers, in finance-related litigation.
More state insurance regulator Q&As: