Business panel thwarts department’s second try at insurance regulation compliance

Business panel thwarts department’s second try at insurance regulation compliance

by
Dustin Hurst
March 20, 2012
Dustin Hurst
Author Image
March 20, 2012

On Monday, the House Business Committee thwarted a second attempt by the Idaho Department of Insurance (DOI) to comply with regulatory provisions within the 2010 Patient Protection and Affordable Health Care Act (PPACA).

On a 9-8 vote, the panel killed the bill over worries that it would align Idaho too closely with the PPACA, a federal law the state is suing to block.

The legislation is the second of its kind to come forth in the 2012 legislation session. The bill would have essentially allowed DOI to rate state insurance carriers’ health plans and label increases as too low, too high or discriminatory against certain classes of people. The state department would then communicate that information with the U.S. Department of Health and Human Services for database entry.

The rate review process also forces health carriers to disclose business practices, including how much they spend on overhead, medical services, advertising and how much profit they take in annually.

The prior version of the legislation contained specific mentions of federal code, which legislators saw as threat to the Legislature’s constitutional duty to set laws for the state. That rendition was killed on a 6-9 vote.

The newest version, presented by the agency’s top deputy Tom Donovan, didn’t include specific mentions of the PPACA, but instead cited the need to conform department standards to “other applicable law.”

Boise businessman George Gersema, who testified against the initial version of the legislation, again spoke against the concept, saying the rate review process shouldn’t be handled by the state. “This is about the state of Idaho doing the bidding of the federal government,” Gersema warned.

He added that the bill represented an overreach by the federal government in the marketplace, and pontificated how other economic sectors might feel if their prices were so heavily regulated.

The rate review process wouldn’t have given the state the ability to block rate increases it believed to be too high or low, but that doesn’t mean insurance carriers wouldn’t be punished. Through indirect language in section 1003 of the PPACA, it’s hinted that health carriers with excessive rate increases wouldn’t be allowed to participate in online insurance exchanges, essentially online portals for purchasing medical coverage.

That would also mean the loss of hefty subsidies handed out by the feds. It’s projected that through the exchanges, the federal government will hand out $800 million in insurance subsidies between 2014 and 2020.

Those in favor of the legislation, including House Minority Leader John Rusche, D-Lewiston, said the process brings transparency into health insurance increases. It’s likely the federal government will now handle the rate review process for the state.

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