A year ago today, as President Obama signed the landmark Affordable Care Act into law, members of the
In particular, NAIC members charged with reviewing reports and making recommendations pertaining to President Obama’s Affordable Care Act are being accused by the group of “regulating former employers or campaign supporters,” notes Carmen Balber, Washington director for Consumer Watchdog, a Washington, D.C., nonpartisan consumer advocacy organization.
The consumer group, in a release, charges that 24 of the state insurance commissioners worked for the insurance industry before being appointed and two were elected with insurance industry campaign contributions, according to analysis released by Consumer Watchdog. Two elected commissioners count the insurance industry as their top campaign contributors, according to the National Institute on Money in State Politics:
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Six past presidents of the NAIC exited since 2000 to work for the insurance industry as lobbyists and consultants, the Consumer Watchdog group said. Of the six, two became the top Washington lobbyists for their insurance firms: George Nichols, who leads New York Life's Office of Governmental Affairs, and Alessandro Iuppa, who was hired to head government and industry affairs, North America, for Zurich Financial Services.
“We think it’s a very clear conflict of interest for commissioners to be regulating their former employers, or to be accepting campaign contributions from the industry that they regulate,” Balber told Insurance Networking News. “However, in most cases, they are not, in fact, breaking the law.”
Balber added that although some states do prohibit this activity, there is no prohibition in Georgia or Kansas on the acceptance of insurance industry contributions. “They weren’t blatantly breaking any laws, but instead putting themselves in a pretty big ethical quandary,” she said. “At minimum, they are functioning under an ethical cloud.”
The Consumer Watchdog has called on the NAIC to ban commissioners from lobbying their former colleagues when they leave to work for the insurance industry and from taking a job in the industry for at least a year after leaving office, for governors to reconsider appointments of long-time insurance industry executives, and for states to prohibit insurance industry campaign contributions to insurance commissioner candidates.
"The insurance commissioner holds the state's top consumer protection job, with enormous impact on the price of consumers' health insurance,” said Balber in a statement. “Commissioners shouldn't be regulating former employers or campaign supporters. With the National Association of Insurance Commissioners becoming such a prominent voice in health reform implementation, it's critical that we close the revolving door between the insurance industry and regulators."
On Monday, March 28 when the NAIC’s Health Insurance and Managed Care (B) Committee convenes, (http://www.naic.org/documents/committees_b_110328_agenda.pdf) its work will include review of the NAIC’s Health Insurance and Managed Care (B) Committee Subgroups’ and Task Forces’ reports pertaining to consumer information, exchanges, health actuarial topics, establishing a regulatory framework and issues that affect seniors. The Exchanges Subgroup is currently under the purview of Michael McRaith (IL), president Obama’s pick to head the newly created Federal Insurance Office.
According to the Hill.com, (http://thehill.com/blogs/healthwatch/health-insurance/151251-consumer-group-rings-alarm-as-state-insurance-regulators-weigh-broker-protections) state regulators are also expected to consider legislation that would protect agents and brokers from some of the financial effects of healthcare reform. Agents have been lobbying to have their fees excluded from the calculation of the medical loss ratio, which requires health plans to spend at least 80% of premiums on care or offer discounts, The Hill reports.
Health insurers and brokers are on record asking to reopen regulations on the medical loss ratio to consider further amendments, including the reclassification of some claims reporting and fraud-related functions as health-related instead of administrative costs, and removing the Department of Health and Human Services' authority to require states prove they will experience serious market disruptions in order to obtain a waiver to the medical spending rules.
“There is a judgment we have to make as to how an insurance regulator is supposed to function,” Balber said. “This position in many states represents the most important consumer protection job—and this position has more control over what consumers are spending than many other jobs in the state.”
As of this writing, the NAIC had not returned comment. INN will update the story as needed.
