With provisions for selling health insurance across state lines included in both health care reform bills being considered by Congress, Minnesota officials have begun looking at the issue so they’ll prepared for any changes that may affect the state.
Wednesday’s joint meeting of the House Commerce and Labor Committees heard testimony that generally opposed any attempts to let health plans not licensed here come into the state.
The committees took no action but just tried to learn more.
One concern: Because Minnesota has some of the broader mandates and better health care oversight provisions than many other states, some worry that opening up the state borders to outside health plans would set off a “race to the bottom,” as local insurance companies respond to lower cost plans that might not provide coverage as good as we have now.
House Public Information Services also covered the hearing and notes:
Gov. Tim Pawlenty is in the camp that the competition should be created by the private sector.
Deputy Commerce Commissioner Manny Munson-Regala said the governor is proposing that residents be permitted to purchase plans sold in other states if it meets four criteria, including [that] the company must agree to abide by Minnesota’s claims practices and consumer protection laws.
He also said the governor is also proposing the state help establish an interstate health insurance compact to let states “join and share common regulatory standards to facilitate the purchase of health insurance across state lines.” It would be modeled after a compact that has made it easier to purchase life insurance.
Minnesota is part of a multi-state compact that regulates other types of insurance policies — life, annuities, long-term care — that can be sold in all the states. Consumer protection, though, remains with the individual states.
Some insurance companies have a bad track record in other states — as far as treating consumers and fighting over coverage — and those companies would not be allowed to sell here, state officials said.
Michele Kimball (no relation to me), an AARP representative, told the legislators that there are concerns about the “potential loss of longstanding consumer protections currently guaranteed by Minnesota law.”
She urged legislators to be “very cautious in opening our doors to insurance companies that are not licensed here, and are not under the control of our Commerce department, are not answerable in our courts and are not required to meet all of the standards set by Minnesota law and regulation.
She worried that out-of-state companies might go bankrupt or refuse to pay for life-or-death surgery. Or that out-of-state firms might use high-pressure sales tactics to “peddle insurance that sounds like a good deal, but which offers little coverage and poor value.”
“We’re talking about a race to the bottom,” she said. “Why allow companies to sell substandard policies?”
She worried that inadequate policies will send untreated mental health issues to the hospitals, creating additional costs for the state. .
Phil Griffin, speaking for the Minnesota Council of Health Plans, said his group is “deeply concerned” about proposed changes.
He said health insurance is dramatically different than life insurance and annuities — which are covered under the existing multi-state compact — because they require ongoing treatment and care and, therefore, are much harder to regulate across state lines.
“I don’t think we’ll get better health care reform if we allow coverage across state lines,” he said. “It will put us at a competitive advantage. There are lots of fees and assessments we pay in Minnesota that others wouldn’t have to pay.
“Improvements in health care aren’t happening in Alabama or Mississippi,” he said.