Health insurers — and other insurers — have persuaded state insurance accounting regulators to rethink proposed rules for reporting on the money coming from the big new federal health risk management programs.
Life insurers and property-casualty insurers joined health insurers in arguing that the original proposal could have eventually hurt many different types of insurers, not just health insurers, by creating a new class of “nonadmitted assets”: “difficult to estimate” assets.
Members of the Accounting Practices and Procedures Task Force, part of the National Association of Insurance Commissioners (NAIC), decided earlier this week at the NAIC’s summer meeting in Louisville, Ky., to have the NAIC staff redraft “Accounting for the Risk-Sharing Provisions of the Affordable Care Act,” the issue paper containing the provision.
Originally, drafters had called for a health insurer to treat the money it expects to get from the Patient Protection and Affordable Care Act (PPACA) risk adjustment program and the PPACA risk corridors program as an “admitted asset” only after the government entity managing the program confirms that a payment was coming.
See also: Regulators unsure about PPACA risk programs.
Now, the NAIC staff is supposed to replace the draft provision that would have kept estimated risk program payments out of admitted assets. The staff is supposed to replace the nonadmission approach with “criteria that incorporate conservatism and sufficiency of data” — or, rules requiring the health insurer to show that it has evidence to support its risk program payment estimate and tried to be careful when it came up with the estimate.
Regulators admit an asset when they believe an insurer can probably use the asset to meet obligations to policyholders. An insurer may have little or no ability to use nonadmitted assets when showing they meet a state’s solvency standards.