Health reform alters traditional state regulation of health insurers

The traditional role of state regulation of health insurance products is being transformed with the implementation of the Patient Protection and Affordable Care Act. Nearly three dozen states opting not to set up state-based health benefit exchange marketplaces are effectively ceding regulation of some or all elements of the individual and small group health insurance markets to the U.S. Department of Health and Human Services’ (HHS) Center for Consumer Information and Insurance Oversight. This Los Angeles Times article provides more detail.

The feds already have a large degree of premium rate oversight authority. 45 Code of Federal Regulations (CFR) Part 154 authorizes HHS to establish an annual rate review process to identify “unreasonable” health insurance rate increases. The regulation is enforced jointly by the feds and state regulators or solely by the federal government if states opt not to participate.

This raises questions regarding the future of state-based regulation of individual and small group health coverage. Will health care reform ultimately produce a hybrid of state and federal regulation? And since a majority of states is opting out of the state-based exchange marketplace, will it create momentum for a future shift to full federal regulation?


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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