Recent deliberations of the National Association of Insurance Commissioners on health care reform have rekindled an old question: does the insurance industry have too much say in how the NAIC decides in its model recommendations and other standards?
There are hundreds of insurance industry lobbyists pressing their views with the NAIC on various issues. Most recently, they pushed to modify proposals for medical loss ratios (MLRs) and other provisions of the Patient Protection and Affordable Care Act (PPACA).
By and large, consumer reps agree the NAIC's recommendations to the U.S. Department of Health and Human Services (HHS) provided some solid protections for consumers.
To support consumer representation in the discussions of its various committees, the association established a consumer participation program in 1992, where selected individuals representing the interest of consumers are appointed to a consumer liaison program. Those representatives attend open sessions of the NAIC at meetings the association holds each year.
These consumer representatives are classified as funded and unfunded. Funded representatives are reimbursed for travel costs to attend meetings, while unfunded reps are not. (This year, the NAIC began to reimburse unfunded reps for their meals.)
In 2010, 18 funded consumer representatives and 10 unfunded representatives were appointed by the NAIC's Consumer Participation Board of Trustees, consisting of six state insurance regulators and six consumer representatives.
Interviews with some of these chosen representatives found a broad mix of views on whether they have an adequate voice.
The Struggle to Be Heard
Like many unfunded consumer reps, Melvin Hollowell, the insurance consumer advocate for the state of Michigan and an unfunded consumer rep, himself, the situation is a frustrating one. He notes that the NAIC's official intent is to provide an equal voice for consumers as well as for the industry, but in practice, it does not play out that way.
Comparing manpower, industry lobbyists outnumber consumer advocates at NAIC meetings by an order of magnitude. "In terms of raw numbers, there's no comparison," Hollowell says. "The industry has an army of lobbyists, lawyers, actuaries, and boots on the ground ramped up to protect their turf."
But he also adds that despite this lopsidedness, consumer reps give more bang for the buck. "There is a super-talented group of folks who are my colleagues as consumer reps–they are a pretty stellar group that is as effective as any group I've ever worked with. It's so impressive."
More importantly, Hollowell believes that the NAIC does pay attention to the public's advocates. In its meeting in Seattle this summer, where implementation of PPACA was a prime issue, he saw an immediate responsiveness and high degree of respect between both sides. He also says the NAIC staff was helpful in getting information and explaining policy issues for consumer reps.
Timothy Jost, a law professor at Washington and Lee University, Lexington, Va., another funded consumer representative, says he thinks consumers are well represented before the commissioners. Jost was involved in the discussions of MLRs and tried to make sure those provisions of PPACA were implemented as Congress intended. Despite the large numbers of industry representatives, he says consumers got a fair hearing from the NAIC, which came to Jost as a pleasant surprise.
"My feeling is that the commissioners understand their job is to protect consumers," Jost says. "I always felt they respected us and responded to our concerns."
Still, consumers at NAIC meetings are clearly outnumbered, especially agents and brokers, he says. "Producers have the most the most powerful lobby as far as I can see."
"We're facing a huge industry, so I never feel we have enough representation," says Bonnie Burns, training and policy specialist with California Health Advocates, Sacramento, Calif., a funded rep. "But this year, we've had considerable impact on the NAIC process. In some instances, we were helpful to regulators who have political problems taking similar positions to ours."
The industry has "terrific power," Burns says. "They have lobbying, they have money. And even if we can get [a proposal] through the NAIC, they can stall it at the federal level."
Burns, who specializes in long term care (LTC) advocacy, said she had helped the NAIC adopt model rate stability provisions for LTC insurance in 2000, which make it hard for carriers to impose huge premium increases on customers.
"Somehow we failed in that because now we are seeing some large long term care companies raising rates," she says, referring to recent rate hikes by insurers such as John Hancock, which recently increased its LTC rates by 40%, a move deeply unpopular among agents and policyholders.
LTC insurance, she notes, "is sold to people as a way to do right thing, to protect themselves if they would need care later." Now it appears buyers of LTC policies didn't buy the protection they thought, she laments.
"I think some of the regulators are equally distressed" about LTC rate increases, she says.
Burns said she also worked with the NAIC's working group dealing with a summary of benefit forms health insurers will have to issue to help consumers understand differences among health care policies when reform provisions start going into effect next year.
Insurers have concerns because they will have to prepare these forms and make them available to health plan members. "We want to make sure they give people the ability to compare one policy with another," Burns says.
PPACA requires insurers to provide consumers with a four-page document that describes all elements of a policy so people can compare deductibles as well as limitations, excluded benefits and other provisions.
The industry is resistant to brief summaries of plan reliance because its legal experts fear that insurers could be legally bound by the summaries' terms. But the summary descriptions are not a contract, Burns argues.
She says she is content with the MLR recommendations the NAIC recently presented to HHS. She is worried, however, that the health insurers might continue to work against some reform provisions outside the NAIC.
