The National Association of Insurance Commissioners (NAIC) said it has “serious concerns” that the proposed rules for creating state health insurance exchanges could lead to unfair market advantages for health insurance plans that operate in multiple states.

In an Aug. 10 letter to the U.S. Office of Personnel Management (OPM), Iowa Insurance Commissioner Susan Voss, the NAIC’s current president, warned that multistate plans should not be exempted from state consumer protection laws and regulations. The letter was in response to a request for information the OPM had issued to solicit input from insurance companies that might offer such multistate plans.

“If the standards imposed upon Multi-State Plans are less stringent than those imposed upon others, Multi-State Plans will benefit from an advantage and will draw business away from those plans that are subject to state laws,” the NAIC wrote. “This could become particularly problematic if this unlevel playing field creates an opportunity for Multi-State Plans to attract healthier risk or avoid sicker risk than their competitors.”

The Patient Protection and Affordable Care Act requires that states either set up their own exchanges by Jan. 1, 2014, to allow consumers to evaluate choices for health insurance coverage, or the federal government will set up and operate an exchange for them. State-organized exchanges are required to be financially self-sustaining by 2015.

The NAIC further warned that multistate plans should not be exempted from state fees and assessments, which it said would place additional costs on individuals and small employers purchasing coverage from other carriers.

“Allowing larger insurers a free ride at the expense of smaller competitors would damage competition and could endanger the viability of exchanges,” the NAIC said.

To read the entire NAIC letter, click here.

http://www.naic.org/documents/committees_b_110810_naic_comments_msp_to_opm.pdf