Stormy Affair

Despite the usual tense relationship between the two organizations, the National Conference of Insurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC) appear to be coalescing around a common enemy: the federal government.

Both groups recently held their spring meetings and discussed the enactment of the Patient Protection & Affordable Care Act and the status of new Federal Insurance Office.

They focused on Obamacare’s new state insurance exchanges. Teresa Miller, former top regulator in Oregon and now with the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services, serves as a senior advisor on state exchanges. She told both NCOIL and the NAIC that the department would soon issue guidance to assist the states in developing their exchanges. A week later, it did.

The department is promising guidance “soon” on satisfying essential health benefit standards, exchange-Medicaid eligibility issues, tax credits for the exchanges, and how exchanges will operate in states that do not create their own.

Miller emphasized the federal government’s desire to work with states that need help developing their exchanges. Few will have made “certifiable” progress on their exchanges by 2013, as required by the law. While many states are dragging their feet while they await the Supreme Court’s ruling on the law’s constitutionality, they also desperately want to maintain the state-based nature of the exchanges. So the Department of Health and Human Services is talking a great deal about flexibility and working with individual states throughout the development process.

Miller made clear the January 1, 2013, deadline to certify an exchange’s progress is not a drop-dead date. The government will continue after that date to help non-certified states create their own exchanges or work within the federally facilitated exchange in their states. This could be a sizable number of states. The government estimates that more than half the states are well on their way to establishing exchanges, which, of course, leaves as many as two dozen that are not.

The states lagging behind essentially fall into three categories:

• Those that wish to develop exchanges but have not done so
• Those that want nothing to do with exchanges and intend to allow the federally facilitated exchange to operate in their states
• Those states that fall somewhere in the middle, waiting to see how things play out.

It’s not surprising that many states are not acting, given the vitriolic political culture. For their part, state regulators and legislators consistently pressed Miller for more information. Their frustrations were predictable. State legislators focused on politics, missing no opportunity to bash or defend, depending on their partisan leanings, the healthcare reform law and the Department of Health and Human Services.

Regulators, on the other hand, generally avoided politics, focusing instead on technical and enactment issues. To their credit, they focused on how best to work for consumers. Their focus on policy over politics was brought into sharp relief when one of the state commissioners offered a resolution to protect “religious freedom” in insurance (in response to the contraception coverage brouhaha). The resolution was not even debated by the NAIC membership (consideration failed for lack of a second). Imagine that happening among state legislators.

Healthcare reform will continue as a major NCOIL topic, but the real action will be at the NAIC. Regulators are taking a deep dive into the core functions of the state exchanges: eligibility, enrollment, plan management, consumer assistance and financial management. They are studying each function to provide guidance, model laws and regulations. Maybe this will bring some uniformity and consistency to state exchanges. (Just don’t hold your breath.)

The other issue of significance to brokers is the relationship between the state and federal governments, specifically the Federal Insurance Office. As with healthcare, the views of the legislators and regulators were predictable, although the NAIC’s position appears to be evolving.

The state legislators spent the better part of a day ruminating about the insurance office and the nefarious schemes that the federal government is hatching to take over insurance regulation from its rightful rulers at the state level. The insurance office, of course, has no regulatory authority and very little “hard” authority even in the international sphere. State legislators, however, are convinced this is not just the camel’s nose under the tent, but both humps. They see scenarios where the feds will depose the states any day now.

In contrast, state regulators exhibited a much more collegial view toward the insurance office and the federal government. Of course, they grumbled about their federal counterparts, but they appeared more willing to work with the government than to compete with it. To illustrate this goodwill, Arizona Insurance Director Christina Urias will be giving up her seat on the International Association of Insurance Supervisors board to Mike McRaith of the Federal Insurance Office.

Is this the beginning of a beautiful friendship? We doubt it, but stay tuned.