News Flash From the LA Times: Baucus Bill Would Let Insurance Industry Set Rules for Reform

Today, the LA Times reports:

“Healthcare overhaul legislation moving through the Senate Finance Committee would put crucial rule-making authority in the hands of a private association of state insurance commissioners that consumer advocates fear is too closely tied to the industry.

The National Assn. of Insurance Commissioners currently writes model laws and regulations that individual states are free to accept or discard. Under the bill by Sen. Max Baucus  (D-Mont.), it would craft a model rule governing ‘health insurance rating, issuance and marketing requirements’ that would become ‘the new federal minimum standard without any further congressional action.’ States would be permitted to deviate from the standards only by appealing to the Department of Health and Human Services.

In effect, the bill would allow the group to write many of the new rules on issuing and marketing insurance to millions of uninsured Americans who would be required to purchase policies.

‘The NAIC is clearly an organization that is dominated by the insurance industry,’ said California Lt. Gov. John Garamendi, a former state insurance commissioner.



‘I think the NAIC has an important role to play. They have a lot of knowledge, but I would be concerned about giving them authority to set the rules.’

The group's 56 members are public officials — the elected or appointed chief insurance regulators of the states, the District of Columbia and five U.S. territories — responsible for enforcing laws that vary widely in rigor depending on jurisdiction.

But the association itself is a private organization not subject to open meetings and public records law, noted J. Robert Hunter, insurance director of the Consumer Federation of America and a former Texas insurance commissioner.

‘They have no transparency,’ he said. . . .Putting the rule-writing pen in the association's hands would be ‘totally inappropriate,’ said the Consumer Federation's Hunter. ‘The NAIC is not accountable. [Federal lawmakers] don't have any control over them.’

Much of the criticism, particularly from consumer groups, stems from the departure of top association officials for plum industry jobs.”

Thanks to reader Brad F. for calling my attention to this piece. For the full story click here

I’ll comment later but for now, let me just say, this makes it even clearer: We need a public sector insurance option to set a high bar for affordable, comprehensive insurance.

Meanwhile, on the Senate Finance committee, Jon Kyl (R-AZ) is arguing that insurance policies shouldn’t have to include maternity benefits.  His argument: I don’t need maternity benefits, so why should I have to help pay for them?

7 thoughts on “News Flash From the LA Times: Baucus Bill Would Let Insurance Industry Set Rules for Reform

  1. its quite a journalistic leap to construe this headline, “Baucus health bill would let private group write rules,” presented here as a public service for those who don’t click through to the underlying story and concluding that the insurance industry would set the rules. Those who follow NAIC, to say nothing of the less liberal insurance commissioners, might see things a bit differently. Its basically a group that tries to create common state standards (you might check out its record on long-term care coverage) while the industry obviously has a voice, that doesn’t make it an insurance group.
    if they don’t write the rules, who will? that sure ain’t a level of detail covered in legislation. at best you’ll get report language delegating the task to the secretary of hhs, which might yield uncomfortable outcomes when there was a Republican president.

  2. Jim–
    Unfortunately, state insurance regulators have a long, dismal history of not regulating very well– in most states.
    You ask “If they don’t write the rules, who will?”
    The answer is that we don’t want “regulators” who have a close relationship with the for-profit insurance industry writing the rules.
    We tried that with the banking industry. Didn’t work out too well.
    I wrote about insurers and state regulators years ago at Barron’s.
    People on Wall Street are relatistic enough to know that state insurance regulation is very close to the industry regulating itself.
    Again– I would except a few states.
    Ask the citizens of most states if they think for-profit insurers are well regulated.
    Finally, as the LA Times story points out, the revolving door to “plum” industry jobs is not a good sign.
    AS you suggest there are a several quotes in the story trying to say that letting state regulators set the rules is a good idea.
    That’s exactly why I provided the link to the whole story
    But I didn’t find those quotes at all persuasive–usually the speaker had an axe to grind.
    And I don’t repeat dis-information on the blog.
    AS many jouranlists– and those who think and write about the ethics of jouranlism agree– there is a huge problem with the idea of “balance” in news reporting.
    Editors often tell reporters– “you need to find 2 or 3 people who say the opposite.”
    Rerpoter–” but the truth is . . .”
    Editor– “Forget about the truth. We have to find two sides to this story, even if there aren’t two sides.”
    So we read stories about the U.S. military torturing suspected terrorists which include
    quotes justifying the U.S.
    violating int’l law to torture detainees who have been detained on the flimsiest grounds.
    That’s “balanced” reporting.
    There are many cases when it is appropriate– and cases where it is not.

  3. Because I live in Arizona, I just called Senator Kyl’s office and let his staffer know that while I am past menopause, I think maternity benefits (which I am beyond using) should be part of a standard health insurance package. I also argued that his opposition to standard maternity benefits could be considered in conflict with his pro-life position. If we want to get him to change his position, we need to get his pro-life GOP base to start calling him on this, and presenting the scenario of a young woman not purchasing maternity coverage because she isn’t planning on getting pregnant, but does. With no medical coverage, she might be more likely to have an abortion.
    On a related topic, if this goes through, I want to be able to opt out of paying for any old geezer’s Viagra.

  4. Wasn’t Ms. Sebeluis an Insurance Commissioner before becoming a governor?
    Seems to me I know people who’ve appealed to their state insurance commissioner and gotten advocacy.
    Today I read in the NYT that states are threatening to amend their laws to prohibit the Federal Gov’t from requiring insurance. More on a state’s rights plank than an anti-health issue.
    Perhaps this idea has more merit than you give it for political reasons?

  5. Foxes guarding chicken coops and revolving doors between government and the private sector.
    I’M REALLY SICK OF IT WHEN WE HEAR AND READ OF DAILY HORROR STORIES ABOUT LACK OF HEALTH CARE IN THE US.
    Maggie -Thanks for more truthtelling where “balanced reporting” is NOT called for!
    Dr. Rick Lippin
    Southampton,Pa

  6. Maggie N.,Ginger C. and Dr. Rick
    Maggie N–
    Welcome to the Blog. And I’m so glad that you called his office.
    I love it when people actually ACT (in a rational way) on what they
    read on healthcare blogs.
    Good for you.
    (And to the many other readers who have said “I wrote to my Congresman; I passed the article that you linked to on to someone else . .) — thank you all very much.
    This is why I write the blog, and respond to your comments. My goal is to build an interactive community of readers who will read, adn when they see an opening, ACT.
    Back to Maggien N-
    – I agree with most of what you write, though I have to say, I’m happy to pay for the geezer’s Viagra.
    (I have to hope that somewhere, there is a happy woman at the other end of that transaction–and a happy man.)
    Though I tend to agree with Kaiser Permanente. I If memory serves, Kaiser decided to pay half the cost of Viagra–a way of saying, “we’re willing to help but don’t quite view Viagra as a medical necessity.”
    A hard call.
    But of course we should all pay for maternity benefits.
    And you are entirely right– if there are less expensive policies without maternity, some young woman will buy them because they’re not planning on getting pregnant.
    And then they do get pregnant . (Even if a young woman is very conscientious about birth control, it is not 100% effective.)
    What then? (As you say, someone should point this out to right-to-life conservatives)
    Then there are the middle-class 44-year-old women with four children who think they can’t possible get pregnant again at their age.
    Except they do.
    Insurance is all about recognizing that we are all in the same boat.. We’re all vulnerable to the hazards of fate.
    We need to think collectively.
    Ginger C–
    Yes, Sebelius was a state insurance commissioner.
    And she may have been very good–I don’t know. I just don’t have much information about Kansas.
    On the idea of letting states write insurance laws. ..
    If we don’t have mandates in certain states, that would mean that, in those states, citizens with a pre-exisitng condition would have no protection.
    The only way that we can require insurers to offer insurance to people with a pre-existing condition–and not charge them an unaffodable premium–is if everyone is required to buy insurance.
    Otherwise, a great many people would wait until they were sick before buying insurance, secure in the knowledge that the company would have to insure them and could not gouge them.
    These “free-riders” would make insurance unaffordable for all of us.
    Dr. Rick–
    Thanks much.
    I agree that when so much is at stake, and so many are spreading falsehoods, “balanced reporting is not what we need”
    I think of the period before WW II when many U.S. newspapers were spreading misinformation–or even worse on whether the US should get into the war.
    This led to “On the one hand, on the other hand”
    balanced reporting about whehter or not Hitler was a threat.
    Later, even during the war, some would publish “on the one hand, on the other hand” reports about whether “rumors” of the Holocaust were real.

  7. Of course, the friends are being rewarded.
    Didn’t Obama say he would expose liars? Maybe the Senate Democrats should be exposed for calling their plan reform??