South Dakota legislation would restrict sale of multi-state health plans

South Dakota lawmakers advanced a bill that would restrict the marketing of multi-state health plans (MSPs) to the state’s health benefit exchange, barring their sale outside the exchange market.  Senate Bill 139 would also require MSPs be sold exclusively by state licensed insurance producers and mandates producers be paid commissions on a par with similar plans sold outside the exchange.

Section 1334 of the Patient Protection and Affordable Care Act requires at least two MSPs be offered in each state exchange.  The MSPs will be phased in over a four-year period starting when the exchanges begin operating in 2014, when MSPs must be in 60 percent of the states.

Regulated by both the federal government and the states, MSPs are intended to increase competition and consumer choice, particularly in less populous states such as South Dakota where there are fewer health plans available.  However, existing plan issuers and producers in these states likely fear MSPs will have a disruptive impact on the market and potentially crowd out smaller players by virtue of their interstate heft and superior economies of scale.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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Frederick Pilot

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