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State Legislators May Write a Short-Term Health Model

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State lawmakers with an interest in insurance may write their own short-term health insurance model law.

The National Council of Insurance Legislators (NCOIL) has put the short-term health insurance issue on its agenda for its spring meeting, in Nashville, Tennessee.

NCOIL started the four-day meeting today. The group’s Health Insurance and Long Term Care Issues Committee has put a short-term health insurance item on the schedule for a session set to take place Friday afternoon.

(Related: Dan Morrish to Lead State Insurance Legislator Group)

Short-term health insurance was once an obscure product that recent college graduates and conscientious people between jobs used to stay covered.

Drafters of the Affordable Care Act legislation, and the federal regulators who implemented the ACA, put the product in the spotlight, by exempting short-term health insurance from ACA mandates.

Issuers began positioning short-term health insurance as a potentially low-cost alternative to individual major medical insurance.

Officials in the administration of former President Barack Obama responded to arguments that insurers were saddling consumers with poorly explained “junk coverage” by capping the duration of a short-term health insurance coverage period at three months.

The administration of President Donald Trump fired back  by repealing the Obama-era duration limit and giving states and insurers the option of letting the same short-term health insurance policy be renewed for up to three years.

Democratic officials and policymakers, such as Jessica Altman, the Pennsylvania insurance commissioner, and analysts affiliated with the Urban Institute have been highlighting stories of short-term health insurance users facing big, unexpected bills.

Short-term health insurance distributors, such as eHealth Inc., have posted customer survey data suggesting that typical short-term health insurance coverage users may be pleased with their coverage.

At an NCOIL meeting in December, Randy Pate, the director of the Center for Consumer Information and Insurance Oversight (CCIIO),  arm of the Centers for Medicare and Medicaid Services in charge of Affordable Care Act programs, said the Trump administration believes making short-term health insurance more flexible will increase choices for Americans faced with escalating premiums and dwindling coverage options, according to a summary included in the packet for this week’s meeting.

Sales Standards

Members of NCOIL’s Life Insurance and Financial Planning Committee will be getting an update Saturday on state and federal efforts to set new standards for sales of annuities and other retirement savings products.

Bill Mandia, a lawyer at Stradley Ronon, will brief committee members on the U.S. Securities and Exchange Commission’s Regulation Best Interest project, and the alternatives being developed in New York state, Maryland, Nevada and other states.

State Insurance Legislators’ Role

Only a few state insurance commissioners are elected. Almost all state legislators are elected. In theory, being elected should give state legislators more clout.

In clout, many state insurance commissioners have been in the world of insurance regulation for decades, and many state insurance departments generate large amounts of premium tax revenue. The National Association of Insurance Commissioners, a group for state insurance commissioners, has accreditation standards requirements and insurance company financial data sales programs that help it generate large amounts of revenue.

State insurance legislators also face the challenge that policymakers in Washington often encroach, or try to encroach, on states’ insurance oversight turf.

NCOIL is reflecting that tension in the current meeting agenda with a proposed resolution that calls for Congress to amend the Employee Retirement Income Security Act of 1974 in a way that would help state lawmakers enact more meaningful state health care reforms.

Today, federal law lets states regulate the business of insurance, but ERISA preempts states’ ability to regulate large benefit plans.

The proposed resolution was introduced by Assemblymember Kevin Cahill, D-Kingston, N.Y., and Rep. Jim Dunnigan, R-Taylorsville, Utah.


Links to information about the meeting, including the meeting document packet, are available here.

— Read NCOIL to Look at Policy Conversions and Life Settlementson ThinkAdvisor.

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