WASHINGTON BUREAU — Allowing health plans to sell coverage across state lines without adopting national consumer protection standards could hurt consumers, a federal health insurance regulator and former insurance commissioner testified here today.
Steve Larsen, director of the Center for Consumer Information and Insurance Oversight (CCIIO), an arm of the Centers for Medicare and Medicaid Services (CMS), made the comments during a hearing on “Expanding Health Care Options: Allowing Americans to Purchase Affordable Coverage Across State Lines” that was organized by the House Energy and Commerce Committee.
Larsen argued that the kinds of basic consumer protection standards included in PPACA make interstate health insurance sales feasible.
“Without the consumer protections included in the PPACA, we run the risk of creating an environment where there is a ‘race to the bottom’ in which insurers have an incentive to sell plans from the state with the fewest consumer protections,” Larsen said.
PPACA Section 1333
Larsen, who served as Maryland insurance commissioner for 6 years before taking over as the head of the CCIIO, told lawmakers that Section 1333 of the Patient Protection and Affordable Care Act (PPACA) of 2010 contains a mechanism for facilitating interstate health insurance sales.
PPACA Section 1333 requires the parent department of CMS, the U.S. Department of Health and Human Services (HHS), to issue regulations governing the creation of “health care choice” compacts by July 1, 2013.
Starting Jan. 1, 2016, two or more states will be able to use a compact to allow qualified health plans based in the participating states to sell health insurance in all participating states.
The plans will be subject to the laws and regulations of the state in which the plan was written or issued, and compact plans must offer the same benefits required by the consumer’s state, Larsen said.
“These provisions ensure that interstate sale of health insurance is not a back-door attempt to disadvantage higher-risk individuals or preempt critical consumer protections,” Larsen testified.
The Republican Perspective
Rep. Joseph Pitts, R-Pa., chairman of the Energy and Commerce Committee’s health subcommittee, said consumers should be able to avoid the cost of buying policies that comply with state mandates.
“States have begun to realize that, while well-intentioned, mandating important health benefits and provider coverage for their citizens has backfired,” Pitts said.
At least 12 states now permit the sale of “mandate-free” or “mandate-lite” policies, “so that people can buy a plan that is more suited to their needs, with fewer costly mandates,” Pitts said.
“This should be about consumer choice, not a one-size-fits-all mandate package that may or may not address a particular individual’s needs,” Pitts said.