National insurance plans created by the healthcare reform law must be held to the same state-by-state standards as their smaller competitors, state insurance regulators warned Monday.
The National Association of Insurance Commissioners (NAIC) said lax rules for national plans would create an unfair competition and deprive consumers of certain benefits.
The healthcare law calls on states to establish insurance exchanges — new, competitive markets for individuals and small businesses to buy coverage. And to ensure some level of competition in every state, the law says two nationwide plans have to be offered in every state’s exchange.
Although the plans will be national, the NAIC said, they still should have to comply with each state’s laws and meet any additional standards the states set for their respective exchanges.
“If the standards imposed upon Multi-State Plans are less stringent than those imposed upon others, Multi-State Plans will benefit from an advantage and will draw business away from those plans that are subject to state laws,” the NAIC said in comments about the national plans.
The healthcare law sets minimum criteria for plans to be sold in an exchange, but allows states to go beyond those requirements. If multi-state plans don’t have to comply with any additional mandates, the NAIC said, their costs might be lower and they might be able to cherry-pick healthier patients. That would further increase prices for competing plans and perhaps even drive them out of a state’s market.
“Exempting Multi-State Plans from the additional consumer protections a state has put in place will confuse consumers, leave some consumers with less protection than others and result in an unlevel playing field that could give the largest insurers additional competitive advantages in the marketplace, thereby undermining the goal of the (healthcare law) to create more competition in health insurance markets and strengthen consumer protection,” the NAIC said.
An administration official welcomed NAIC's response to the government's request for comments about multi-state policies.
“The Request for Comment was designed to generate this kind of feedback," the official said. "We appreciate NAIC’s views and will consider them as we move forward.”
— This post was updated at 1 p.m.