Health Reform Could Jeopardize Laws in California, Other States
Some consumer advocates fear that state insurance coverage mandates and consumer protections could be weakened under new federal health reform legislation that would allow insurance to be purchased across state lines, the Los Angeles Times reports.
The worries are most acute in states that have created laws to protect consumers beyond existing federal regulations. For example, California requires insurers to pay for HIV/AIDS testing, second surgical opinions and reconstructive surgery for breast cancer patients.
Some opponents of the provisions in reform legislation say that allowing insurers to sell policies across state lines could launch a "race to the bottom" to avoid those strict coverage mandates and enforcement regulations.
Interstate sales "is insurance code for picking their rules," Jerry Flanagan, a patient advocate for Consumer Watchdog, said. "The insurance companies will all run to Wyoming to issue policies, and Wyoming laws would rule in California," he added.
Supporters of interstate insurance sales say the practice would allow insurers to sell customized policies and avoid regulations and mandates they view as burdensome and costly. In addition, some say that consumer advocates' fears are unfounded.
"Companies design these policies knowing that people want certain benefits and certain benefits are popular," J.P. Wieske, state affairs director for the Council for Affordable Health Insurance, said. He added, "And if you don't include them, you may not be able to sell the policy. So mandates are an issue, but they are not the issue for the insurance companies."
Others contend that federal legislation could include a benefits "floor" that would mandate a minimum set of services that all policies would have to cover.
Coverage mandates are not the only issue where insurers might be able to bypass state laws if interstate sales are allowed. Some states, such as California, require that insurers promptly pay claims, and if an insurer refuses to pay for a treatment, policyholders can appeal the decision to an independent board whose decisions are binding.
Federal legislation contains provisions that seek to preserve some state authority over consumer protection laws.
For example, the House reform bill (HR 3962) would establish a federal oversight commission and an appeals and grievance process. In addition, the House bill includes a "buyer beware" notice that says policies sold across state lines must "provide for clear and conspicuous disclosure to consumers that the policy may not be subject to the laws and regulations of the state in which the purchaser resides."
However, advocates say these federal provisions would be difficult to enforce. "It's a problem because there is no state that has the capacity to regulate insurance sold outside its borders," Karen Pollitz, a professor at Georgetown University's Health Policy Institute, said. She added, "They just don't. They don't have enough people. It's not practically possible" (Girion, Los Angeles Times, 11/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.