Mailbag: Is this the end of state regulation?

"But it's not clear why they'd want that."

A: Competition.
B: Things aren't exactly going real well in the insurance markets as regulated by state regulatory authorities, so maybe they should try something else.

There's actually one more piece to this -- the Senate bill also allows for "national plans," which can be offered across state lines and ignore state benefit mandates. But they'll have to satisfy some presumably-beefed-up regulations, and states can opt-out, so again, not a huge reason to be concerned. All this in Section 1333.

States with cross-border metropolitan areas-- NY/NC/NJ, MD/VA, WA/OR, etc.--might be interested in it.

Ezra,

good post. This is again another example of those that don't know should wait until they have an idea of what's going on before they speak. The liberal fear of all companies flocking to Delaware or North Dakota and selling crappy plans really never made sense.

Likewise Morning Joe last night stated that this legislation would require every state to have an insurance comissioner. Uh, JOE, They already do. Just another example that MSNBC really should do a little homework before some of their talking heads talk. Keith Olbermann is another one. He should stick to what he knows, football. Before i get accused of anything I agree 10000% that Beck is a loon, Hannity is wrong all the time too and Limbaugh needs to be put out of our misery.

We don't know what's in the final bill. We do know that insurers have long wanted to operate across state lines, and so if this bill gets Ben Nelson's vote you can bet there will be language moving us in that direction.

Group health insurance companies are licensed by the states in which they do business. This gives us the 50 different sets of laws and regulations governing things like solvency and complaints. Each of the states also establishes the benefit mandates required for insurance policies (but not self insurance exempted by ERISA) sold in that state. The desire to sell across state lines is not so much to escape the regulation as the mandates, which add greatly to insurance costs. Most licensed insurers would like to be able to sell the plans with the fewest mandates as these plans will have the lowest rates and be the most competitive.

@ostap666 -- the issue is that some states have beefier requirements than others, and so if a ND insurer could offer products in CA (abstracting away the very real issues with building and supporting provider networks, etc.), it would undercut CA Blue Cross, Kaiser, and basically all the other doemstic insurers, so that they'd wind up bleeding market share, which means fewere customers, fewer jobs, etc.

When that's the fruit of "competition," you're not likely to find many takers.

These provisions could come into play in places where you've got multiple nearby states with smaller populations and similar regulatory regimes -- i.e., perhaps some parts of the northeast -- where more players and stronger economies of scale could actually strengthen the market. But it's not like this approach is going to be universally helpful, which is why it's important that states be able to make decisions for themselves.

As for point B, I admit I haven't bounced this particular idea off of any of the insurance regulators I know, but I think the argument "we're not able to regulate as well as we'd like -- how about we try deregulation instead!" is unlikely to find a very welcoming reception, post 9/08.

Ezra, it appears that Ben Nelson's ransom demands have escalated to the point that unless Snowe is on board, this thing is over.
Any comments?

http://www.dailykos.com/storyonly/2009/12/18/816105/-Ben-Nelson:-Bill-covers-too-many-uninsured-people,-must-be-scaled-backer.

"But it's not clear why they'd want that."

The promise of a few hundred jobs that can be renegged in 5 years will be all it takes.

"The promise of a few hundred jobs that can be renegged in 5 years will be all it takes."

Indeed. And it doesn't take much to buy a Dakota.

^ True, but for the insurers to make huge profits off of this, they don't need to buy a Dakota -- they need to buy a New York or a California. And in the problematic cases, states signing on for one of these would likely see a loss of jobs, since they reward out-of-state insurers.

This is an area I've been watching closely, since I work for an organization that's very state-focused and wary of policies that would pre-empt, or de-facto pre-empt, state level regs, but in current form this language really isn't that worrisome. If I were writing the bill, I'd change both strands to an opt-in, but it's certainly no reason to oppose or even get too worked up about, given the more important pieces of reform.

Firedoglake says you're completely wrong.

http://fdlaction.firedoglake.com/2009/12/18/they-are-called-%E2%80%9Cnationwide-plans%E2%80%9D-and-they-do-gut-state-regulations/

And Firedoglake quotes the bill, (section 1333) so it appears that this is not just a "claim" but is really just fact.

"(B) with respect to State laws mandating benefit coverage by a health plan, only the State laws of the State in which such plan is written or issued shall apply to the nationwide qualified health plan."

Can you maybe offer up another post outlining what you think the good and the bad of this provision is?