One of the primary features of the Affordable Care Act is the establishment of state-based health insurance exchanges.

The National Association of Insurance Commissioners is urging the U.S. Office of Personnel Management to avoid opening a loophole it says would favor multi-state plans at the expense of smaller insurers.

In a letter to OPM, NAIC President and Iowa Commissioner of Insurance Susan Voss says that the multi-state plan program envisioned for the exchanges could provide some of the nation’s largest insurers with significant market advantages.

“Insurance Commissioners and the NAIC have serious concerns about the potential for market disruption and adverse selection, and the resulting negative impact on consumers and health insurance markets which would arise if multi-state plans are allowed to operate under different rules than their competitors,” Voss writes.

Beginning in 2014, OPM is charged with contracting with at least two health plans to be automatically sold on every state’s exchange as “multi-state plans.” NAIC’s concern is that language within the law could exempt multi-state plans from state consumer protection laws and regulations, such as those governing unfair trade practices, unfair claims practices, network adequacy, external review and marketing. Voss says this would amount to separate sets of rules for large multi-state plans.

“One of the primary concerns raised by multi-state plans is that they have the potential to create an unlevel playing field within health insurance exchanges,” the letter states. “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. 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.”

Bill Kenealy writes for Insurance Networking News, a SourceMedia publication.

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