Commissioner Goodwin responds on Consumer questions

Martha,

Good morning!

I believe it is important to note the related bigger issue that prompted the discussion. Please see the press release and linked documents issued by the North Carolina Department of Insurance *from September* at this link here.

The text of the public press release, indicating the basis for my requesting a *modified* waiver, predates most of the communications received much later from you and others on this subject.

The September 6, 2011 press release states:

“Insurance Commissioner Wayne Goodwin today announced North Carolina's request to U.S. Department of Health and Human Services Secretary Kathleen Sebelius to adjust the applicable medical loss ratio standard for the individual comprehensive health insurers in North Carolina.

"The Patient Protection and Affordable Care Act requires insurance companies to spend at least 80 percent of premium dollars on medical care and health care quality improvement, rather than on administrative costs, starting in 2011. Upon request, the federal government may grant a state adjustments to the standard if it is determined that the 80 percent medical loss ratio requirement could destabilize the individual market in the state.
North Carolina has requested that the 80 percent MLR requirement be adjusted to 72 percent in 2011, 74 percent in 2012, and 76 percent in 2013. Comprehensive health insurers issuing policies to individuals would have to meet the 80 percent MLR standard in 2014.

"Goodwin issued the following statement:
I believe it is in North Carolina's best interests to request an adjustment to the MLR requirement in order to safeguard consumer choice of health plans, while also holding insurance companies accountable to higher standards. The hope is to limit the potential for short-term disruption of the health insurance market in North Carolina prior to the full implementation of the Patient Protection and Affordable Care Act in 2014.

"The decision to request an adjustment was made after consultation with insurers, agents and brokers, consumer advocates, physicians and Department of Insurance technical experts, including its actuaries. I am pleased that each state's insurance regulator is provided the opportunity to make such a request, as it demonstrates the importance of continued state-based regulation of insurance-something I have fully supported since taking office. State-based insurance regulation, as opposed to federal insurance regulation, much better preserves consumer protection, promotes insurance market stability and ensures carrier solvency." (end of press release excerpt)

Also, do note that I am *not* against consumer rebates. My record is loud and clear on how strongly I work for insurance rebates, refunds, restitution, etc. for NC consumers. Just in September 2010 alone I ordered $156 Million (see link here, and here, for examples) in health insurance rebates for 215,000 NC policyholders, a historic sum which dwarfs the NC rebates involved with MLR and which prompted a shout-out by the President at the White House (and noted here on BlueNC and in news media statewide). What I am for is recognizing the fact that every State’s health insurance market is different; and, accordingly, many states have taken the path within the PPACA to request a temporary waiver of the MLR to allow a smoother transition.

As spelled out in the request for the modified waiver, the request for the modified waiver itself is not seeking to eliminate rebates but to ensure (1) that North Carolina’s health insurance market is not destabilized by the rapid requirements of MLR; (2) that North Carolina has the opportunity to have a more competitive market for health insurance, and not necessarily see one company automatically take even more than its current share of 81.1% of the individual health insurance market and 26 other carriers doing business in North Carolina splitting up the remaining 18.9% or less; and, (3) that we prevent insurance counselors, brokers, and advisors, particularly in small-town/rural NC but across the state, from being targeted for elimination and commission cuts unfairly and discriminatorily by their employers (i.e., insurance companies) in ways that harm consumers access to in-person counsel from someone they know personally in their community. Consumers should still receive significant rebates, but the amounts will be based on many factors. Even the sums estimated for rebates per state by some national consumer groups , etc. have been determined to be mathetatically too liberal in their estimates and have now been scaled back once actual, more current data and conditions were analyzed.

PPACA affords the States the right – the option – to seek waivers, including modified waivers, as they deem fit and based on the best data available. The North Carolina Department of Insurance, based on the data reported, would be remiss if it had not requested a modified waiver – especially since it is the statutory duty of the Insurance Commissioner/NC Dept of Insurance to prevent insolvent insurance companies from doing business here, a duty that neither the US Dept of Health and Human Services or Congress has.

Presently USDHHS and Secretary Sebelius has neither approved nor disapproved the request, but has asked for additional information from NC.

Though there was a great debate about the agent-broker commission issue during the November vote on a resolution of the NAIC, this matter is actually a subset of the bigger picture above, a picture I ask folks to be aware of. The action taken by the Department was based on an actuarial review of North Carolina-specific data and on reports received by the Department and me. The position taken by state insurance commissioners in other states – on commissions and MLR in general - is based on the data applicable to their own respective markets and their own anecdotal and reported experiences within their State borders.

Regardless, in the broad scope about consumer protection, I am very pleased with the fact that in less than four years my team and I have saved North Carolina individuals, families and small businesses more than $1 Billion through refunds, rate cuts, rebates, restitution, fighting insurance fraud, and other front-line activities. I promise to continue my work, and am asking the voters to give me that chance in the 2012 election.

Thank you for your inquiry. Though this particular post/update is delayed, the answer itself has been public and readily available online and in the news media since September.

Meanwhile, I believe you will be pleased with some forthcoming news both about a great development for NC consumers and my work as chairman of the national Consumers Participation Board of Trustees. (We have an RSS feed at www.ncdoi.com to get up-to-the-minute press released by NCDOI if you’d like to track it that way.) Stay tuned!

Kindest regards and best wishes,

Wayne Goodwin
NC Insurance Commissioner

P.S. You can see by the time of this post - almost 2AM - that my work is not just first shift but sometimes second and third shifts! (For those who aren't familiar with shift work, consult folks you know who have worked in years past at manufacturing, automotive and textile plants.)