Insurance Regulation 2013: What the Future Holds...

A couple of industry observers, Arthur D. Postal and Elizabeth D. Festa, speculate on the future of state and federal insurance regulation in 2013.

Assuming the Mayans just got tired of calendaring out the centuries and the world doesn't end on December 21, 2012, Arthur D. Postal of Lifehealthpro.com has consulted the augurs and put together his federal regulatory forecast for the life and health insurance industry in Washington Regulation: 6 Things to Look for in 2013.

Postal's article is worth the read, but a few highlights:

• Although speculation previously suggested that the report on insurance modernization by the Federal Insurance Office (FIO) would finally arrive, a year after its original deadline, in January of 2013. Postal says that now appears unlikely "with signs emerging that the administration will delay the release of the report until after a new Treasury secretary is confirmed sometime early next year."

One reason for the apparent delay is that the administration doesn’t want Republicans in Congress to use the report to embarrass the administration through the confirmation process if it contains proposals calling for greater federal regulation, a politically sensitive issue.

• Although consolidated regulation of insurance companies that operate savings and loans is mandated under the Dodd-Frank Act, "members of Congress have made clear through recent hearings that they won't support strong oversight of these institutions." As the designated regulator, however, the Federal Reserve Board may have its own ideas.
• American International Group (AIG) could be designated a "systemically important" non-bank financial institutional by the Federal Stability Oversight Council before the end of the year, and other insurers could face similar designation next year.
• Taxes are going up, including estate taxes. But Postal suggests that "with the certainty likely to be generated by knowledge that the government is coming to terms with the need for increased revenue and lesser expenditures, the stock market is likely to rise...".[1]

Also tempting the Mayan fates is Elizabeth D. Festa, who crystal-balls 2013 with respect to state regulation in State Regulation: 4 Things to Expect in 2013 at Lifehealthpro.com.

Again, Festa's article is definitely worth the read, but consider a few of her points:

• Like Postal, Festa also predicts the emergence of the long overdue FIO report on insurance modernization.

While there is plenty to speculate about, only when it is finally issued by the Federal Insurance Office will we have an idea of the FIO’s intent toward a more modern regulatory regime, including whether it intends to act purely as a fact-finding body, or if it will lay the groundwork for more substantive action.

• New NAIC President, Louisiana Insurance Commissioner James J. "Jim" Donelon will have his hands full after the retirement of current NAIC CEO Terri Vaughn at a time when the NAIC has "an ambitious agenda and no small number of critics."
• To the extent the various states have elected to participate, state regulators will be busy setting up and working with the health care exchanges under the Patient Protection and Affordable Care Act. Regulators may also be occupied with trying to push the principles-based reserving provisions of the recently adopted NAIC Valuation Manual through their state legislatures. [2]

1. Washington Regulation: 6 Things to Look for in 2013, Arthur D. Postal, Lifehealthpro.com, December 19, 2012.
2. State Regulation: 4 Things to Expect in 2013, Elizabeth D. Festa, December 19, 2012.

Insurance Industry Supports Legislation Designed to Restrict Federal Insurance Office's Regulatory Authority

The proposed Insurance Data Protection Act would require the FIO and other federal regulators to obtain information about insurance companies from state regulators rather than directly.

A panel of the House Financial Services Committee approved the Insurance Data Protection Act[1], legislation designed to restrict the ability of federal regulators to get financial information from insurance companies.[2]

As currently configured, the Insurance Data Protection Act is intended to clearly delineate the FIO's role as an "information-gathering entity" and restrict its ability to act as a regulator.

The bill would revoke the authority of the FIO and the Office of Financial Research (OFR), two new entities created by the Dodd-Frank Act, to subpoena data from insurance companies.

The bill also would require the FIO, the OFR, the Financial Stability Oversight Council, and any other federal entity that seeks data about insurance companies to obtain that data through the insurance company's state regulator, another federal agency, or a public source.[3]

Further, the Act would require both federal entities and state regulators to preserve the confidentiality of private information collected from other state and federal agencies.[4]

The Property Casualty Insurers Association of America (PCI), an insurance industry trade association composed of more than 1,000 member companies nationwide, issued a press release last week applauding the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity for passing the Insurance Data Protection Act.

According to Ben McKay, senior vice president of federal government relations at PCI:

This commonsense bill will help reduce costly, duplicative information requests on insurers... The Insurance Data Protection Act reinforces the Dodd-Frank Act that specifically required the Federal Insurance Office to seek data from state regulators first before imposing burdensome data demands on insurance companies.[5]

R.J. Lehmann, deputy director of the Heartland Institute's Center on Finance, Insurance and Real Estate, suggests that the bill increases the protection afforded insurer information from the restrictions on sharing "confidential" information to a higher level because the bill includes limits on the sharing of "non-publicly available data" by or among state and federal regulators. While Lehmann has his own theories about the who and why behind this provision, he makes an important point:

The bill’s language refers not to “confidential” information, but to non-public information. That’s a key distinction. The statutory financial reports that insurers file with their state regulators and the NAIC are not confidential... That data is not confidential. It just isn’t made available to the public.[6]

1. H.R. 3559
2. New Legislation Tries to Pose Serious Threat to Federal Insurance Powers, Elizabeth D. Festa and Arthur D. Postal, LifeHealthPro, December 9, 2011.
3. New Legislation..., Id.
4. New Legislation..., Id.
5. PCI Supports Insurance Data Protection Act, December 8, 2011. 6. The Insurance Data Protection Act’s hidden sop to the NAIC, R.J. Lehmann, Out of the Storm News, December 9, 2011.

FIO to Develop and Coordinate Insurance Policy at the Federal Level

The Federal Insurance Office will be able to develop and coordinate insurance policy at the federal level, but Treasury says insurance regulation is still fundamentally state-based.

Deputy Treasury Secretary Neal Wolin says that the newly created Federal Insurance Office, under the leadership of its first director Michael McRaith, will have the "institutional capacity to develop and coordinate insurance policy at the federal level more effectively than in past," according to a recent article by Business Insurance.[1]

Insurance regulation "is not one of FIO's responsibilities."

The creation of the FIO by the Dodd-Frank Act corrected the "glaring omission" of the lack of such capacity, according to Wolin. But the regulation of the insurance industry "is not one of FIO's responsibilities," said Wolin. He also added that:

Nothing in the Dodd-Frank Act alters the fact that insurance is fundamentally regulated by the states.[2]

For his part, McRaith said that the FIO "will not be driven by any ideology" in its study of improvement and modernization of insurance regulation. The study is due to be submitted to the Treasury Department in January, but McRaith has indicated the first report will cover only the most important points, such as transparency in financial statements and consumer relations.[3]

FIO recently held it's first conference: "Insurance Regulation in the United States: Modernization and Improvement."

Both McRaith and Wolin made their comments at the first FIO conference recently held in Washington D.C., entitled, "Insurance Regulation in the United States: Modernization and Improvement." The conference was attended by insurance regulators and industry representatives. McRaith was clear that the conference was not intended to be a panacea to the ongoing debate about FIO's role in insurance regulation:

The question is not whether, but how, we can improve and modernize the insurance regulation in the U.S. We don't expect to reach agreement today. We don't expect everyone to walk out holding hands. What we do expect is a lively discussion of the issues facing the industry.[4]

Generally, the insurance representatives agreed that the FIO was important as a "single point of contact" for insurance issues at the federal level, and especially international insurance issues. With the development of the Solvency II insurance regulatory standards in Europe and emerging markets around the world, many insurers recognize that a global outlook is vital.[5]

FIO must understand the insurance industry and not merely assume that it's like the banking industry.

One of the insurance representatives, Michael Grier, vice chairman of Prudential Insurance, stressed the importance of the federal government gaining, through FIO, a true understanding of the insurance industry, and that it not merely assume insurers are like banks or other financial institutions for regulatory purposes.[6]

A transcript of Deputy Secretary Wolin's remarks is available here.

1. Ideology Won't Drive Insurance Regulation Changes: McRaith, Mark A. Hofmann, Business Insurance, December 9, 2011.
2. Ideology won't drive..., Id.
3. Ideology won't drive..., Id.
4. Industry Reps Agree FIO Important, but Disagree on Role it Should Play, Elizabeth D. Festa and Arthur D. Postal, Property Casualty360, December 9, 2011.
5. Industry Reps Agree..., Id.
6. Industry Reps Agree..., Id.

Standard Operating Procedure in the Life Insurance Industry Brings Bad Press and May Spur Regulatory Action

A recent push by insurance regulators across the country on life insurance companies has already resulted in millions of dollars of previously unpaid benefits going out to thousands of beneficiaries, but some suggest that settlement fees, fines, penalties and escheat payments are the real impetus behind state enforcement actions.

The typical life insurance policy requires beneficiaries to notify the insurance company of the death of an insured before policy benefits are paid out. However, as recent press reports have emphasized, this standard operating procedure has left potentially hundreds of millions of dollars in unpaid life insurance claims, and tens of thousands of beneficiaries without the benefits they are due.

The Wall Street Journal suggests that regulators are placing the blame on the insurance companies:

Regulators say most life insurers fail to take steps to determine whether policyholders have died, leaving it to beneficiaries to file claims. But some families don't know their loved ones hold policies. It is a widespread problem, state officials say, and one that hits lower-income families the hardest. [1]

Recently, New York's state Department of Financial Services announced that almost 8,000 people received more than $52 million in unpaid life insurance benefits after it began pushing life insurers to look for unpaid claims internally. The Department of Financial Services urged life insurers to use resources like the U.S. Social Security Administration database to identify deceased insureds under life insurance policies, annuity accounts and retained asset accounts.[2]

Some life insurers have already been performing cross-checks with the Death Master File for years.

While some companies, such as Massachusetts Mutual Life Insurance and Prudential Insurance Company of America have been performing regular cross-checks with resources like the Social Security Administration's Death Master File for years, the Department of Financial Services was pushing life insurers to go back more than twenty-five (25) years in their searches for unpaid life insurance benefits, according to Thomas Workman, president of the Life Insurance Council of New York.[3]

New York is not the only state interested:

Meanwhile, a task force of regulators from Florida, California and eight other states is aiming to reach up to three settlements with major insurers as soon as next month, Florida officials said.[4]

Florida officials have already reached a settlement with John Hancock Life Insurance Company that resulted in payments to beneficiaries, or turned over to states as unclaimed property, of more than $88 million.[5]

Regulators and attorneys general are probing whether regulatory or enforcement action is appropriate.

The regulatory task force, as well as some state attorneys general, are probing whether regulatory or enforcement action is appropriate, although life insurers maintain their procedures are lawful and in accordance with the policy terms.[6]

These probes generally are focused around concerns that many big insurers for years have routinely used a Social Security death database when doing so has been beneficial to their business, such as to cut off retirement-income checks. But they haven't used the same database to ensure payouts to life-insurance policyholders' beneficiaries, the authorities say.[7]

Life insurers are still reviewing up to 950,000 other policies and almost 28,000 old claims for additional unpaid benefits.

The average payment to beneficiaries resulting from the New York push was almost $7,000, which the largest overdue payment was more than $670,000, plus interest. Meanwhile, life insurers are still reviewing up to 950,000 other policies and almost 28,000 old claims that could result in millions more in unpaid benefits to beneficiaries.[8]

The amount of the unpaid benefits and the number of affected beneficiaries in states like New York and Florida have gotten the attention of regulators from across the country:

New York is just one of 35 states that are investigating the Death Master File issue. Regulators have estimated that as a result of those allegedly improper payment practices, the combined damages across the affected states may exceed $1 billion.[9]

While the push by regulators for life insurers to track down unpaid claims is certainly good for beneficiaries, it may also be good for state government treasuries. Settlement agreements, fines and penalties mean money in "depleted state coffers," noted Bruce Ferguson with the American Council of Life Insurers, as reported by the Wall Street Journal.[10]

State escheat laws may require that some abandoned claims be paid out to the state treasury.

Another possible boon for ailing state government pocket books: unclaimed or abandoned property generally escheats to the applicable state treasury. That means if life insurers find that they owe unpaid benefits to beneficiaries on old policies, but they can't track down those beneficiaries, state escheat laws may require that money to be turned over to the state government.

1. Bring Out Your Dead: Push Pays Off for Policyholders, Leslie Scism, Wall Street Journal, December 6, 2011.
2.  Life Insurers Pay Out $52.6 Million after NY Push, Karen Freifeld, Reuters, December 5, 2011.
3.  Life Insurers Pay Out..., Id.
4. Bring Out Your Dead..., Id.
5. Bring Out Your Dead..., Id.
6. Bring Out Your Dead..., Id.
7. Bring Out Your Dead..., Id.
8. Insurance bigs sat on $52M cash owed grieving New Yorkers, Douglas Feiden, New York Daily News, December 6, 2011.
9. Life Insurers Pay N.Y. $52.6M Post Investigation, Jeff Jeffrey, A. M. Best Company, Inc., Insurance NewsNet.com, December 5, 2011,
10. Bring Out Your Dead..., Id.

Cavalcade of Risk No. 222

Insurance Regulatory Law is quite grateful to welcome the Thanksgiving edition of the Cavalcade of Risk, bringing a bounty of information on a variety of insurance-related topics from a number of different experts. The Cavalcade is a biweekly, rotating collection of articles and links (also known as a "blog carnival") from insurance and other risk-related resources that provides some great information and insight about risks and risk management.

Without further ado, Insurance Regulatory Law presents the 222nd Edition of the Cavalcade of Risk:

• Henry Stern at InsureBlog digs into a bowlful of Unintentional Medical Tourism with a side of coverage controversy. When a 6-months pregnant Canadian woman took a personal trip to Hawaii, she brings home a bouncing baby souvenir and $1 million in medical bills. InsureBlog fisks the MSM's coverage. Read the full article for more information.


• The Health Business Blog eschews the turkey and tries to decide between the chicken and the egg. In Chicken or egg: Do family dinners lead to health or vice versa?, the Health Business Blog sets the table with what seems like a clear case of cause and effect: having dinner together leads to better health. But maybe family dinner is just a proxy for high-income families with leisure time. The risk is that we underestimate the social determinants of health and are too smug about our own virtue. Read the full article for more information.


• On his Governance, Risk Management & Audit blog, Norman Marks serves up an extra helping of Technology, Strategy, Cyber, and Risk cooked over a slow boil of disruptive technology. Disruptive technology - think 3d printing - poses risks that many (most?) businesses haven't considered, and Norman Marks makes the case for why they should. Read the full article for more information.


• Hilary Tuttle at the Risk Management Monitor hones in on the retail side of the Thanksgiving tradition. Yes, Thanksgiving means Black Friday is closing in, so How Retailers Can Better Mitigate Black Friday Risks offers up some handy tips for retailers interested in mitigating risks associated with the annual sales behemoth. Read the full article for more information.


• The Risk Management Association blog is already looking forward to the next annual sales behemoth, Christmas, with its post CFPB Proposes New Protections for the Prepaid Market about pre-paid products (i.e., gift cards and the like), explaining how proposed new rules for these pre-paid products may help mitigate consumers' risks. Read the full article for more information.


• And last, but certainly not least, Jeff Waters at the RMS Blog brings us all back down to earth with Canada earthquake risk 85 years after the Grand Banks earthquake and tsunami. When you think of Thanksgiving, you probably don't think about earthquakes and tsunamis. Well, when you think of earthquakes and tsunamis, Canada's probably not the first locale that comes to mind. But the RMS Blog notes that November 18th marked the 85th anniversary of a 7.2 magnitude quake "up North," and discusses the risks of another one in the near future. Read the full article for more information.

The next edition of the Cavalcade of Risk will be hosting by Bob Wilson at WorkersCompensation.com. Thanks for reading, and have a great holiday!

Supreme Court Agrees to Hear Health Care Reform Challenges, But Health Care Reform Already Fundamentally Changing the Health Care and Health Insurance Industries

Although the Supreme Court has agreed to hear challenges to health care reform, the debate is unlikely to be settled by the high court's decision, and the landscape of health care and health care insurance is already undergoing major and lasting changes.

As reported by a number of news outlets, the United States Supreme Court has indicated that it will hear legal challenges to the Obama administration's health care reform initiatives, which were set forth primarily in the Patient Protection and Affordable Care Act of 2010 and related legislation ("PPACA"). Arguments before the Supreme Court justices in the health care reform matter are scheduled for March of 2012.

The justices announced they will hear an extraordinary five-and-a-half hours of arguments from lawyers on the constitutionality of a provision at the heart of the law and three other related questions about the act.[1]

PPACA includes a number of different reforms relative to the health insurance industry as well as public health programs with the stated goal of increasing individual health insurance coverage while decreasing health care and health insurance costs.

The law's "individual mandate" is a principal point of contention.

A number of states and other parties have filed challenges to PPACA, with one of the principal points of contention being the so-called "individual mandate" under PPACA that legally requires individuals to obtain a minimum level of health insurance coverage. However, other issues will also be before the Supreme Court when it hears the matter in March.

The questions the Supreme Court asked lawyers to argue when the justices consider appeals of President Barack Obama’s health care overhaul in March:

• Does Congress have the power to mandate that Americans buy health insurance or pay a penalty?
• If the requirement to buy insurance is unconstitutional, is the whole law unconstitutional? What other parts of the law, if any, could survive?
• Is Congress illegally coercing states to expand Medicaid, the subsidized health care for the poor and disabled, by threatening to withhold funding from states that refuse?
• Since the penalty for not buying health insurance doesn’t go into effect until federal income taxes are due in 2015, are legal arguments currently brought against the health care overhaul premature?[2]
  

Observers are predicting a Supreme Court decision on President Obama's health care reform sometime next summer, just before the November presidential election. As such, health care reform is expected to become a major political issue in the presidential race.

The Supreme Court's decision on the constitutionality of the individual mandate is unlikely to finally settle the matter.

However, both sides of the argument agree that the Supreme Court's decision on PPACA and the constitutionality of the individual mandate is unlikely to finally settle the matter. Opponents of the health care reform initiatives say that, even if the Supreme Court upholds the individual mandate and other matters at issue, they will continue to challenge other provisions and seek repeal of the Obama administration's health care reform legislation in Congress.

But if the Supreme Court strikes down the individual mandate as unconstitutional, proponents have indicated their commitment to continue pressing forward with the rest of Obama's health care reform agenda.[3]

The health insurance industry has already begun to change because of these initiatives and other forces.

Additionally, the health insurance industry has already begun to shift as a result of legislative initiatives such as PPACA and other forces, including economic pressures and consumer demands. Consider the following from a recent New York Times article suggesting that health care in the United States is inexorably changing, despite the legal uncertainties:

No matter what the Supreme Court decides about the constitutionality of the federal law adopted last year, health care in America has changed in ways that will not be easily undone. Provisions already put in place, like tougher oversight of health insurers, the expansion of coverage to one million young adults and more protections for workers with pre-existing conditions are already well cemented and popular.

—

From Colorado to Maryland, hospitals are scrambling to buy hospitals. Doctors are leaving small private practices. Large insurance companies are becoming more dominant as smaller ones disappear because they cannot stay competitive. States are simplifying decades of Medicaid rules and planning new ways for poor and rich alike to buy policies more easily.

—

Other changes influenced by the legislation may leave some patients and doctors lost in the new land of giants. As medicine moves from a cottage industry to one dominated by large organizations, some patients with insurance will probably find their choices more limited. But their care may be better coordinated, as hospitals, doctors and even insurers join to streamline services.

—

Even if the Supreme Court upholds the law’s requirement for many employers to offer coverage to workers, it is not clear that Congress will want to keep the requirement in its current form or see it vigorously enforced. With the nation’s unemployment rate stubbornly stuck around 9 percent, businesses often cite the costs of providing health care coverage as one of the reasons they cannot hire or expand their work force.

—

Despite opposition in some corners and lukewarm reception in others, a wholesale repeal of the law by Congress may be unlikely. Lawmakers may find it unpalatable to abandon the entire effort, given the fact that critics of the law have not agreed on one comprehensive proposal that would offer coverage to anywhere near the 50 million Americans who are still without coverage. Even if the law goes into effect, an estimated 20 million will still be without insurance. [4]

1. Supreme Court Will Hear Health Care Case This Term, Jesse J. Holland and Mark Sherman, Associated Press, Business Week, November 14, 2011.
2. A Quick Look At The 4 Questions At Issue In The Supreme Court’s Health Care Overhaul, Associated Press, November 15, 2011.
3. Justices Unlikely To Have Last Word On Health Care, Ricardo Alonso-Zaldivar, Associated Press, November 15, 2011.
4. Whatever Court Rules, Major Changes in Health Care Likely to Last, Reed Abelson, Gardiner Harris and Robert Pear, New York Times, November 14, 2011.

Election Impact on the Insurance Industry: More of the Same – A LOT MORE

Recent articles and opinions suggest that the recent election means a lot more of the same for the insurance industry – including a new flood of regulations.

A number of insurance industry observers and pundits have recently discussed the potential impact of the recent election upon the insurance industry and insurance regulation.

FIO is likely to play expanding role in insurance regulation

An article from Insurance Networking News, for example, suggests that the Federal Insurance Office (FIO) will likely play an expanding role in insurance regulation, particularly on the international front. The article quotes industry observers who agree, including the following comments from Peter Kochenburger, executive director of the Insurance Law Center at the University of Connecticut:

The federal government absolutely has the right to regulate insurance. That has been decided since 1944, but it has consistently declined the opportunity to do so. * * * It’s a long overdue office, but it has not exercised its jurisdictional authority in any kind of way that assumes it’s going to override the states.[1]

Kathy Burger, Editorial Director of Insurance & Technology, predicts that "for the insurance industry the results appear to be... more of the same."

With Barack Obama reelected, continuation of a Republican House and Democratic Senate, and the so-called "fiscal cliff" looming, it looks as if insurers will be facing pretty much the same kinds of challenges as before the elections. The Affordable Care Act will stay in place, meaning health insurers must navigate the transformation of their industry. Dodd-Frank isn't going away, which means stepped up efforts around reporting, risk management and navigation of "too big to fail" definitions. The world hasn't gotten any less risky, as evidenced by the devastation caused by Superstorm Sandy and this week's Nor'easter. And the competitive landscape in financial services continues to be unsettled, with new kinds of competitors and consumer-driven channels creating new opportunities for education, interaction and service.[2]

Healthwatch, the Hill's Healthcare Blog, seems to agree but also seems to emphasize more.

The new waiting game in healthcare isn’t about the political future of the Affordable Care Act, but rather the huge amount of work that still has to be done to implement it. As expected, the Health and Human Services Department is moving ahead quickly on several key regulations that had been held until after the election.

Since Election Day, HHS has submitted regulations to the Office of Management and Budget on essential health benefits, insurance regulations, wellness programs and quality initiatives.

* * *

With the healthcare law’s political future now assured, the focus over the next few months will be on the states and the rule-making process, and all signs indicate that a new flood of regulations is about to begin.[3]

Unfortunately, according to the Hill and Moody's, more of the same is not good news for insurers:

President Obama’s reelection is... bad news for insurance companies, according to the latest analysis from Moody’s. The Affordable Care Act “will have negative credit implications for insurers based mainly on the additional regulations and restrictions it imposes on insurers,” Moody’s wrote. [4]

PropertyCasualty360 also sees the status quo continuing, and that means that the Affordable Care Act (ACA) is here to stay. However, some insurance industry analysts suggest the health insurance exchanges required under the ACA may be delayed:

Beth Mantz-Steindecker, a health regulatory analyst at Washington Analysis, is suggesting that implementation of the exchanges may be pushed back because so few states are prepared to implement the program.[5]

Other implications of the 2012 elections on the insurance industry, according to the PropertyCasualty360 article, potentially include the following:

Designation of certain insurers as systematically significant by the FSOC could happen soon.

• The release of the FIO's report on proposals to modernize the regulation of insurance regulation is likely imminent;
• The Financial Stability Oversight Council will likely begin designating certain non-banks such as insurers as systemically significant, and potential insurer candidates include American International Group, MetLife and Prudential Insurance;
• Implementation of consolidated regulation of insurance companies which operate thrift holding companies will move forward, although it could be delayed due to insurer objections; and
• The Terrorism Risk Insurance Act may not survive, at least in its current form.[6]

1. Election Brings New Faces and an Expanding Role of the FIO, Chris McMahon, Insurance Networking News, November 8, 2012.
2. Impact of 2012 Election on Insurance: More of the Same?, Kathy Burger, Insurance & Technology, November 9, 2012.
3. Overnight Health: HHS Moving Quickly on Key Regulations, Sam Baker and Elise Viebeck, The Hill, November 12, 2012.
4. Overnight Health..., id.
5. The Election's Impact on Insurance Issues, Arthur D. Postal, PropertyCasualty360.com, November 7, 2012.
6. The Election's Impact..., id.

Heath Insurance Reform Lobbying Intensifies

The health care and insurance industries lobby the Obama administration to shape the rules and regulations that will govern the creation and operation of the forthcoming health insurance exchanges.

The federal Department of Health and Human Services has received thousands of comments on the preliminary rules it issued earlier this year on the new insurance markets and exchanges established under the Patient Protection and Affordable Care Act, also known as Obamacare. As the 2014 deadline for institution of the state-based exchanges looms, just about any industry involved in the nation's health care system is trying to get its voice heard on how the new reforms should ultimately be implemented.[1]

The exchanges will be "online hubs for individuals and businesses to compare and purchase health insurance plans.

The health insurance exchanges are intended to be state-run "online hubs for individuals and businesses to compare and purchase health insurance plans."[2] However, if an individual state does not establish an exchange compliant with the Affordable Care Act by 2014, the federal government will create and operate that state's exchange instead.

While the Affordable Care Act provided some basic guidelines for the exchanges, much remains unknown, including some of the fundamentals such as the minimum health insurance coverage and benefits that exchange health plans will be required to provide.

America’s Health Insurance Plans, which lobbies for the insurance industry, has pushed the Obama administration to leave much of the regulation to the states, which have traditionally overseen insurance market functions.[3]

But it is not just hospitals and insurance companies that are lobbying to have their voices heard. Many industries could potentially be impacted by the new health system, including the pharmacy industry.

[Pharmacy chain CVS Caremark] has petitioned the Obama administration for rules that would allow its employees, such as pharmacists and nurse practitioners, [to] help consumers navigate the exchange and purchase health insurance.[4]

State insurance commissioners will play a significant part in the creation and operation of the exchanges.

The National Association of Insurance Commissioners is paying close attention to regulatory developments associated with the Affordable Care Act, as well. State insurance commissioners will play a significant part in the creation and operation of the exchanges, and thus, they have a vested interest in the federal rules and regulations coming out of the Obama administration.[5]

1. A scramble to shape the new health insurance exchanges, Sarah Kliff, Washington Post, November 2, 2011.
2. A scramble to shape…, Id.
3. A scramble to shape…, Id.
4. A scramble to shape…, Id.
5. A scramble to shape…, Id.

The Global Federation of Insurance Associations Forms to Address International Regulatory Concerns Such as ComFrame and Systemic Risk

Insurance Associations from around the world have formed the Global Federation of Insurance Associations (GFIA) to address the concerns of the insurance industry on an international scale.

The newly-created Global Federation of Insurance Associations (GFIA), which held its inaugural meeting on October 9, 2012 in Washington, D.C., was formed by thirty-one (31) insurance industry associations from across the world.

The GFIA will coordinate the legislative, regulatory and public relations work of its members.

The GFIA was formed as a global conglomeration of associations representing insurance companies, reinsurance companies, professional associations and other entities in the insurance industry to coordinate the various legislative, regulatory and public relations work of its member associations. According to a GFIA press release:

The GFIA will be active in commenting on a broad range of issues affecting the international insurance industry, including developments in the systemic risk debate; the work of the IAIS in developing ComFrame, the common framework for the supervision of international groups; market conduct and trade issues; and initiatives in relation to financial inclusion and anti-money laundering.[1]

The GFIA appears to be an industry complement to the International Association of Insurance Supervisors (IAIS) that was established in 1994 and which now represents insurance regulators and supervisors in approximately 190 jurisdictions worldwide.[2]

The IAIS appears to support the new GFIA:

Welcoming the creation of the global federation, Peter Braumüller, chairman of the executive committee of the International Association of Insurance Supervisors (IAIS), said: “As the global insurance standard-setter, the IAIS values greatly the contributions of IAIS observers — who represent international institutions, professional associations and insurance and reinsurance companies — to the development and implementation of IAIS supervisory material. We look forward to working with GFIA and its members as we all continue to promote effective and globally-consistent supervision of the insurance industry.”[3]

The GFIA represents about 87% of the global insurance industry.

The GFIA member associations are not themselves in the business of writing, issuing and selling insurance policies; rather, they are trade associations, advocacy groups and similar organizations that are themselves composed of individual participants including insurance companies, producers and other entities in the insurance business. Together, the GFIA member associations claim an aggregate membership representing approximately eighty-seven percent (87%) of the global insurance industry.[4]

Founding associations of the GFIA include a number of associations based in the United States, such as the American Council of Life Insurers (ACLI), the American Insurance Association (AIA), the Reinsurance Association of America (RAA) and the Property Casualty Insurers Association of America (PCI).[5]

Members from other countries include, among others, the All-Russian Insurance Association (ARIA), the Association of British Insurers (ABI), the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), the Canadian Life and Health Insurance Association (CLHIA), the Federación Interamericana de Empresas de Seguros (FIDES), the General Insurance Association of Japan (GIAJ), the German Insurance Association (GDV), the Insurance Council of Australia (ICA), Insurance Europe and the South African Insurance Association (SAIA).[6]

At its inaugural meeting, the GFIA elected its first officers: Frank Swedlove, chair; Recaredo Arias, vice-chair; and Michaela Koller, secretary. Swedlove currently serves as president of the Canadian Life and Health Insurance Association; Arias is the secretary general of the Federación Interamericana de Empresas de Seguros; and Koller is the director general of Insurance Europe.[7]

As the secretariat, Insurance Europe will undertake the significant work that will be required to support the GFIA’s initiatives in key areas of concern to the global insurance industry.[8]

One of those issues, as mentioned in the GFIA Press Release, is ComFrame – the Common Framework for the Supervision of Internationally Active Insurance Groups. ComFrame is a project driven by the IAIS to establish a "common framework" to guide insurance regulators and supervisors around the globe in working together to supervise holding companies and corporate groups that include entities engaging in business that is regulated by insurance regulators on an international scale.[9]

Another important topic for the GFIA is the "systemic risk" issue.

Another important topic for the GFIA is the "systemic risk" issue. Systemic risk is a general concept associated with systemic financial risk, or the risk that an event, or series of otherwise unrelated events, could have a substantial adverse impact on an entire financial system.[10]

In more practical terms, systemic risk involves the concern that a financial weakness or breakdown in one entity (such as a large, multi-national conglomerate) or several such entities, or even in one financial sector or industry, could spread – because of correlation, interdependence, public confidence or other financial or economic forces – to put an entire financial system at risk. The financial system at issue could be regional, national or even international.[11]

Recent efforts to address systemic risk by lawmakers and regulators in various countries around the world, including most prominently the United States and Europe, have been a significant concern of companies in the insurance business and the associations that represent them.

The GFIA press release announcing its formation is available here.

Propertycasualty360.com has a full list of the GFIA's founding members available here.

1. Global Federation of Insurance Associations established, Press Release, Global Federation of Insurance Associations, October 9, 2012.
2. About the IAIS, International Association of Insurance Supervisors, October 17, 2012.
3. GFIA Press Release.
4.  Global Federal of Insurance Associations Launched, Insurance Journal, October 10, 2012.
5. New Global Insurer Association Seeks to Present Unified Industry Voice on International Matters, Elizabeth Festa, PropertyCasualty360.com, October 9, 2012.
6. New Global Insurer Association..., id.
7. GFIA Press Release.
8. GFIA Press Release.
9. Common Framework for the Supervision of Internationally Active Insurance Groups, National Association of Insurance Commissioners, Index of Insurance Topics, July 24, 2012.
10. What is systemic risk, anyway?, macroblog, Federal Reserve Bank of Atlanta, November 6, 2009
11. What is systemic risk…, id.

The Beginning of the End of State-Based Insurance Regulation... Or Another Layer of Regulatory Hurdles?

The Hill's Congress Blog explains that the Affordable Care Act is the latest in a series of federal intrusions into the state-based insurance regulation system.

As previously discussed on Insurance Regulatory Law, the Hill's Congress Blog has recently recognized that the Patient Protection and Affordable Care Act, also known as Obamacare, is the latest trench in the ongoing "struggle between the states and Federal government as to who should regulate insurance products, and who is best positioned to protect consumers."[1]

The Hill opinion, written by Matthew S. Brockmeier of the States Alliance for Balanced Insurance Regulation (SABIR), notes that even before the recent decision by the United States Supreme Court upholding the constitutionality of the Affordable Care Act, the insurance industry and insurance regulation has been a subject of heightened public concern.

The issue of insurance has always been one of great economic importance. It is one of the largest segments of our economy. It is a multi-billion dollar industry that provides us with peace of mind and helps get us get back on our feet in times of crisis. It is also a source of solid, stable, career-track jobs: just walk down Main Street in any town in the nation, and you will see insurance offices of all sizes, providing jobs for thousands and thousands of Americans.[2]

Historically, the insurance industry in the United States was regulated almost exclusively by the individual state governments, but federal encroachment on the primacy of the state-based insurance regulation system has become more prevalent in recent decades, as previously outlined by Insurance Regulatory Law.

Federal legislation threatens to fundamentally alter the business of insurance.

Brockmeier highlights the 140-year history of state-based insurance regulation, but warns that the federal "threat to state-based regulation comes from several pieces of legislation that, taken together, threaten to fundamentally alter the business of insurance as we know it."[3]

Essentially, these bills and regulations would confiscate the states’ ability to regulate not just health insurance but virtually any type of insurance. It’s the “Washington Knows Best” attitude that we have seen time and time again, and Americans from all walks of life should be alarmed by this power grab. [4]

The first attempt at federal encroachment on the state-based regulatory scheme can be traced back to the seminal case of Paul v. Virginia in 1869, when a coalition of insurance companies sought to escape an inconsistent web of dissimilar rules and requirements imposed by the state-based insurance regulation system by arguing that insurance regulation was the province of the federal government.[5]

The Supreme Court held that there was no constitutional basis for the federal regulation of insurance.

At that time, there was very little in the way of federal regulatory framework, and thus this coalition was less about promoting federal regulatory primacy and more about avoiding the morass that the state-based system had become. Ultimately, the Supreme Court held that insurance was not commerce, and thus, there was no basis for the federal regulation of insurance under the U.S. Constitution.[6]

The Hill's piece focuses on the modern era, however.

The first bill to threaten state-based regulation was the Dodd-Frank financial reform bill, which turned two in July. Title V of the bill created the Federal Insurance Office. The FIO is the first ever federal body involved with virtually all aspects of insurance. The statute does not technically confer the power to regulate insurance on Federal Insurance Office - yet. But history counsels that it is only a matter of time before the Office begins to expand its scope and reach.

More notoriously, the Patient Protection and Affordable Care Act (PPACA) mandated the insurance exchanges that have been the subject of heated debate. These exchanges, though they would be regulated by the individual states, would have to comply with federal rules and regulations and would be subject to federal fines and penalties for failure to comply. Any claim, then, that the federal government has not effectively usurped the regulation of health insurance, is illusory.[7]

The federal government has "effectively usurped" the regulation of health insurance.

Arguments for and against the federal regulation of insurance abound in both political circles as well as industry concerns. The National Association of Insurance Commissioners, formed in 1871 – in part in reaction to the issues that led up to the Paul v. Virginia case – has been a vital resource that has allowed the various state insurance regulators to coordinate their activities and develop similar models of insurance regulation in order to reduce the inconsistency affecting multi-state insurance companies.[8]

Brockmeier trumpets the state-based insurance regulation system that "has proven its value over and over again..." with state insurance regulators that "have proven that they have the ability to provide sound, competent, and effective regulation of the insurance industry."[9]

State regulation saw the insurance industry through both the Great Depression and the Great Recession relatively unscathed.

Considering that the insurance industry, due in part to careful and consistent regulation by the state-based insurance regulators, survived both the Great Depression in the 1930s and the Great Recession in the late 2000s with significantly less financial destruction in comparison to other financial industries such as banking and securities, Brockmeier and proponents of the state-based system may have a point.[10]

Brockmeier lauds "having 51 sets of eyes on the insurance industry" versus having "one set of eyes – in Washington, D.C. – looking over the industry."[11]

In a similar vein, many have suggested that large, multi-state (even multi-national) businesses and industries would prefer to deal with "a single 800-pound gorilla, rather than 50 monkeys."[12]

A prime example... is insurance regulation. Insurance companies have always been regulated solely by the states, but most now argue that they need a regulatory framework in Washington to compete with banks and other financial service entities that have been given more flexibility by the feds.[13]

The insurance industry is increasingly answerable to both federal and state regulation.

However, proponents of either state or federal insurance regulation should realize that the insurance industry is increasingly answerable to both one 800-pound gorilla and 50 monkeys. That's because the federal insurance regulatory scheme is not so much usurping the state-based system as it is putting another regulatory layer on top of it.

And potentially more troublesome to the insurance industry is another gorilla beating its chest just across the pond: Solvency II and the rising influence of European Union regulation on the U.S. insurance industry.

1. Beginning of the end of state-based insurance regulation, Matthew S. Brockmeier, SABIR, The Hill's Congress Blog, September 24, 2012.
2. Beginning of the end..., id.
3. Beginning of the end..., id.
4. Beginning of the end..., id.
5. A Brief Chronicle of Insurance Regulation in the United States, Part I: From De Facto Judicial Regulation to South-Eastern Underwriters Ass'n, Van R. Mayhall, III, Insurance Regulatory Law, May 16, 2011.
6. A Brief Chronicle..., id.
7. Beginning of the end..., id.
8. A Brief Chronicle..., id.
9. Beginning of the end..., id.
10. The Insurance Industry and the Great Recession, Part I - Rising Federal Involvement in Insurance Regulation, Van R. Mayhall, III, Insurance Regulatory Law, February 20, 2012; A Brief Chronicle..., id.
11. Beginning of the end..., id.
12. The Washington Offensive, Governing, Alan Greenblatt, January 2005.
13. The Washington Offensive, id.

HUD "Disparate Impact" Rule and the Insurance Industry

The "disparate impact" doctrine is a tenet of employment law that prohibits a facially neutral employment practice which is deemed to have an unjustified or disproportionate adverse impact on members of a minority group or a class protected by Title VII of the Civil Rights Act. Recently, however, the disparate impact doctrine has been the basis of a new encroachment of federal authority into the realm of state-based insurance regulation.

The U.S. Supreme Court championed the disparate or adverse impact doctrine in the landmark employment rights case of Griggs v. Duke Power Co., 401 U.S. 424 (1971). In Griggs, the Supreme Court held that the "absence of discriminatory intent" was not enough to redeem employment procedures if those procedures nevertheless acted as impediments to employment that disproportionately affected minorities or protected classes. Thus, Griggs signaled that not only was intentional discrimination unlawful under the Civil Rights Act, but unintentional discrimination was prohibited as well. If a certain rule or procedure can be shown to have an adverse or disparate impact on a protected class, whether it was intended as discriminatory or not is irrelevant.

The HUD Rule imposes liability for discrimination regardless of intent.

In early 2013, the Department of Housing and Urban Development (HUD) enacted a final rule (the "Rule") implementing the discriminatory effects standard of the Fair Housing Act. As stated in the Rule, the Fair Housing Act prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status, or national origin. HUD, statutorily charged with enforcing the Fair Housing Act, has interpreted it to prohibit practices with an unjustified discriminatory effect, regardless of whether there was an intent to discriminate.[1]

The Rule provides that liability may be established under the Fair Housing Act based on a practice's discriminatory effect, even if the practice was not motivated by a discriminatory intent. Further, the Rule includes a three-part burden-shifting test for determining when a practice with a discriminatory effect violates the Fair Housing Act.[2]

The Rule could expose virtually any factor used by insurers to assess risk or price coverage to challenge on the "disparate impact" basis.

The Rule specifically notes that HUD has long interpreted the Fair Housing Act to prohibit discriminatory practices in connection with homeowners insurance. This means that the "unintentional discrimination" prohibition could reach insurance practices, and insurance companies could face "disparate impact" challenges to virtually any factor used to assess risk or price insurance coverage if such factors have a disproportionate adverse affect on protected classes.

Insurance industry insiders objected to the Rule before it was even finalized, asserting that it was a violation of the McCarran-Ferguson Act's prohibition against federal law interference with state insurance regulation. HUD dismissed these assertions in the final Rule publication, stating that McCarran-Ferguson does not preclude it from issuing regulations that may apply to insurance policies.

The American Insurance Association and the National Association of Mutual Insurance Companies recently filed suit against HUD, asserting that the Rule is a violation of the McCarran-Ferguson Act and challenging the "unintentional discrimination" liability imposed by the Rule.

Additionally, the United States Supreme Court has agreed to hear another case involving a challenge to the Rule. The Supreme Court granted certiorari in Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., in June of 2013, putting the issue of disparate impact claims under the Fair Housing Act squarely before the Court.

1. 24 CFR Part 100 – Discriminatory Conduct under the Fair Housing Act.
2. 24 CFR Part 100 – Discriminatory Conduct under the Fair Housing Act.

Insurance Implications of California Home Builder Air Pollution Mitigation Law

The Supreme Court has declined to hear an appeal challenging a local/regional home developer mitigation law which could have ramifications in the construction insurance market.

The appeal of a lawsuit by the National Association of Home Builders (NAHB) challenging a California law requiring home developers to mitigate carbon emissions from building projects was recently declined by the United States Supreme Court. Many emission-related risks and mitigation-related risks may not be covered by the standard insurance policies typically used in the construction industry today.

Home developers must mitigate the carbon emissions generated by their projects under the law.

Adopted by the San Joaquin Valley Unified Air Pollution Control District, the law at issue forces those involved in housing development projects to mitigate the carbon emissions generated by their efforts. Mitigation can be either by specific green initiatives, or through payments to the District to fund general pollution mitigation projects.

The NAHB originally filed suit to invalidate the law in 2006, asserting that the District did not have the jurisdiction to regulate the environmental requirements of home developers. Both the federal district court and the United States Court of Appeals for the Ninth Circuit disagreed, indicating that local and regional air pollution controls are permitted by the U.S. Clean Air Act.

The standard construction program typically provides contractors liability insurance, builders risk insurance and workers compensation.

A standard construction insurance program typically provides contractors liability insurance, builders risk insurance and workers compensation. Generally, this program would provide protection from third-party claims for damages, damages to the project during construction, and medical/disability payments for injured employees.

Pollution liability insurance is typically a specialized coverage that is not always included in standard construction insurance programs. Additionally, standard pollution liability insurance endorsements may not cover risks related to emission mitigation efforts, risks and/or litigation.

New endorsements specifically designed to cover these mitigation risks could emerge.

To the extent that local and regional governmental authorities continue to impose environmental mitigation requirements on home developers under the Clean Air Act, insurers serving the construction industry will likely be forced to adapt. New endorsements specifically designed to cover these mitigation risks could emerge. If the mitigation requirements become more pervasive, standard construction insurance programs could evolve to incorporate mitigation risk coverages as a standard feature.

Read the full article:

Supreme Court declines home builders' appeal of California air pollution law
Matt Dunning | Business Insurance
October 6, 2011

Federal Flood Insurance Program Extended... At Least Until November 18th

The Insurance Journal is reporting that the United States House of Representatives passed legislation that will extend the federal flood insurance program until at least November 18, 2011. The Senate passed the legislation last week, and President Obama is expected to sign it today.

From the Insurance Journal:

The House and Senate are currently working on legislation that would extend the program for five years and make needed reforms to the program. The House passed its version of the legislation in July and the Senate Committee on Banking has passed a version. But the bill must still be considered by the full Senate.

Read the full article:

Federal Flood Insurance Program Extended Until Nov. 18
Insurance Journal
October 4, 2011

LifeHealthPro: AIG on the Verge of Federal Regulation

AIG, because of pending transactions and the Dodd-Frank Act, may soon become the first insurance holding company ever regulated by the federal government.

According to an article by Arthur D. Postal at LifeHealthPro.com, American International Group, better known as AIG, is "on the verge of becoming the first insurance holding company ever regulated by the federal government."

The Treasury Department is launching a public offering of $18 billion of AIG stock.

A few days ago, the United States Treasury Department announced that it is preparing to launch a public offering of $18 billion of AIG stock. At the same time, AIG announced that it plans to purchase up to $5 billion of that stock, according to the LifeHealthPro article.

Assuming the U.S. divests enough stock such that it no longer holds a majority interest in AIG, industry observers speculate that the Federal Reserve Board will step in and regulate AIG as a thrift holding company under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

The decline of U.S. ownership below 50 percent would trigger federal regulation, according to a bevy of securities analysts and industry lawyers, some of whom formerly worked at the Federal Reserve Board.[1]

The LifeHealthPro article quotes Ray Schoen of Washington Analysis, a securities analytical firm, as suggesting that "the company is poised to face real regulatory supervision of its non-insurance financial business for the first time in its history."

AIG may face new restrictions on dividend payments, share buybacks, minimum leverage and risk-based capital.

Schoen also indicated that, because of the new federal regulation, AIG may face "a litany of new restrictions... including minimum leverage and risk-based capital requirements, as well as restrictions on dividend payments and share buybacks."

Robert Benmosche, President and CEO of AIG, suggested in early August that it was preparing for federal regulation as well as state regulation moving forward.

According to Benmosche and the analysts, AIG will be subject to federal regulation both because it owns a savings and loan holding company based in Wilton, Conn. now regulated by the Fed, and/or through its designation by the Financial Stability Oversight Council as systemically significant.[2]

Schoen also suggests that AIG may be required to separate its financial activities from its non-financial activities, with new restrictions between the two holding companies.

Read the full article:

AIG on the Verge of Federal RegulationArthur D. Postal | LifeHealthPro.com September 10, 2012

1. AIG on the Verge of Federal Regulation, Arthur D. Postal, LifeHealthPro.com, September 8, 2012.
1. AIG on the Verge..., id.

Brace Yourself... Health Reform, Rising Insurance Costs and the PPACA-yderm in the Room

The New York Times breaks down the legal challenges facing PPACA, the Des Moines Register warns of looming rate increases, the Buffalo News thinks PPACA can still do a lot of good while the Washington Times says its doing more harm than good, and the Heritage Foundation suggests there's a PPACAyderm in the country's economic woes room.

As mentioned in a previous article, the Department of Health and Human Services and the Treasury Department continue issuing guidelines and handing out establishment grants for the Patient Protection and Affordable Care Act ("PPACA") health insurance exchanges even as the constitutionality of PPACA's individual mandate requiring U.S. residents to purchase health insurance seems to be on the fast track to the Supreme Court.

The "core fight is whether Congress... can require people to buy private health insurance."

A New York Times editorial breaks down the current legal challenges facing PPACA and its individual mandate, asking: Will Health Care Reform Survive the Courts?

The legal battle over the constitutionality of the health care reform law will determine how far government can go in helping to improve people’s lives. Ultimately, the Supreme Court will have to decide this question. Until then, the pileup of lower federal court rulings — responding to some of the more than two dozen lawsuits filed against the law — is confusing and sharply divided, especially on the requirement that individuals buy or obtain health insurance or pay a penalty.

* * *

The core fight is whether Congress, under its powers to regulate interstate commerce, can require people to buy private health insurance if they don’t want to. Although the law has many elements, the mandate is an important tool for reaching the goal of near-universal coverage — and needed to make health insurance reforms work.

The editorial ends by calling for judicial restraint, urging the Supreme Court to "let political leaders determine what health care reform should be."

Read the full editorial: Will Health Care Reform Survive the Courts?

Bad luck? Within two months of Congress passing PPACA, "the trend in job growth dropped sharply."

With respect to the country’s current economic woes, James Sherk of the Heritage Foundation points out what may be the elephant in the room – an elephant President Obama has named “Bad Luck” but Sherk calls PPACA – asserting that private-sector job creation stopped improving almost as soon as Congress passed the health reform legislation last year.

In May private sector job growth dropped sharply to less than 50,000 net jobs. Thereafter, monthly improvement in private job growth averaged just 6,500 jobs.

What else happened in the spring of 2010? Despite obstacles that many believed would kill the bill, Congress passed the Affordable Care Act. Within two months, the trend in job growth dropped sharply. Monthly job creation had been on pace to top out in the hundreds of thousands. Post-Affordable Care Act, it has barely kept pace with population growth.

Correlations do not - of course - prove causation. The fact that job growth slowed after Congress passed the Affordable Care Act does not prove that the legislation is at fault. There are, however, good reasons to believe that the law applied the brakes to hiring.

Read the full editorial: Did Health Law Bring Economic Doldrums?

LTC insurers request premium rate increases of up to 30% in Iowa.

On a related note, the Des Moines Register’s editorial warns Iowans to brace themselves for rate increases, stating that insurance companies have asked the State of Iowa for permission to increase premium rates as much as 30% this year, primarily with respect to long-term care insurance. While the editorial notes that long-term care policies are relatively new, it blames insurance companies for failing to accurately predict future costs and expenses.

Now that people are living longer and filing claims for care, insurance companies are increasing premiums on others to pay those expenses.

The editorial asks why insurers are seeking rate increases for as much as twice what Iowa state regulators have determined are necessary. Apparently without any research or analysis to try to answer that question, the editorial concludes that insurers “cannot justify raising rates as much as they want” based on a quote from an Iowa state regulator.

Ominously, the editorial concludes:

In Iowa, state regulators are the only thing standing between Iowans and huge rate increases. Yet the increases the state approved can still add up to a lot of money for Iowans. If premiums become unaffordable, they may have to drop their coverage and walk away from a large investment in premiums.

Watch out for that elephant, too, Iowans.

Read the full editorial: Brace Yourself for Rate Increases.

Despite its drawbacks, PPACA "has done and can do a lot of good."

In his column for the Buffalo News, Douglas Turner suggests that PPACA can still do a lot of good.

While so-called Obamacare is a disappointment, the administration and many states like New York are working to squeeze what good they can out of it as the nation waits to see how the U. S. Supreme Court will rule on the sweeping law.

Turner suggests that the Supreme Court will, more likely than not, disallow PPACA’s health insurance individual mandate, but the rest of the law will survive. He goes on to explain his opinion that PPACA will help consumers even without the mandate.

Despite its drawbacks, the Affordable Care Act has done and can do a lot of good. Medicare clients can get wellness exams without co-pays. Americans now have freedom from worry about lifetime limits on coverage. The law has funded state programs to keep customers from being ripped off. No child can be denied coverage because of a pre-existing condition, a provision that will be extended to all in 2014.

Read the full editorial: Affordable Care Act Can Do a Lot of Good.

A "rationally devised formula developed and administered by government bureaucrats will not reduce costs and improve efficiency."

Tracy Miller at the Washington Times disagrees, positing that policy pressures and government subsidies will result in a pricey government-run program that is Doing More Harm than Good.

Insurance could become affordable for most of the uninsured via the subsidies included in the PPACA, but the amount spent on subsidies likely would far exceed the government’s cost projections, adding considerably to government deficits. Many healthy people will choose not to buy health insurance.

* * *

Thus, those who buy insurance will be sicker than average, and many will wait until they get sick to purchase insurance. Premiums will rise to reflect the higher health care costs of those who purchase insurance, making insurance too costly for young, healthy people who do not qualify for government subsidies.

The problem with the PPACA is that a rationally devised formula developed and administered by government bureaucrats will not reduce costs and improve efficiency. Rather, demand and the costs of meeting health care needs would be controlled more effectively with decentralized decision-making in a market economy.

Read the full editorial: Obamacare: Doing More Harm than Good.