Now that Congress has taken final action on its health care reform legislation, the reform debate has now shifted to, of all places, Denver.

The legislation that is now the law of the land was just the first step. Despite its size -- more than 2,000 pages -- the bill in many cases only lays out Congressional intent. In that sense, it is a framework for reform. The law requires that numerous new regulations be written to govern the way health insurers do business, a responsibility that Congress passed on not only to the U.S. Department of Health and Human Services [3] but also to one very influential non-governmental organization: the National Association of Insurance Commissioners [4] (NAIC). The bill mentions the NAIC -- an acronym most Americans probably only see once a year when they renew their cars' license plates -- at least 10 times, and it gives the organization some very important assignments.

Insurance Industry Executives Swarm Conference

The NAIC, which comprises the insurance commissioners from all 50 states, the District of Columbia and the U.S. territories, is having its spring meeting today through Sunday in Denver. The fact that more than 1,700 insurance industry executives are also at the meeting should give you an idea of how important the NAIC is to insurers. Just as members of Congress are far out-numbered by lobbyists on any given day in Washington, the commissioners are far, far outnumbered by insurance company executives who come to NAIC's conferences to try to influence everything the commissioners do.

The NAIC exists to help state insurance regulators achieve five primary goals: "protecting the public interest; promoting competitive markets; facilitating the fair and equitable treatment of insurance consumers; promoting the reliability, solvency and financial solidity of insurance institutions; and supporting and improving state regulation of insurance."

Every insurance company licensed to do business in the U.S. is regulated by state insurance departments and is assigned an NAIC code. (This is where your car's license tag comes in. The renewal forms you get from your state, if you live in one that requires you to buy auto insurance, as most do, ask for your insurance company's NAIC code.)

Congress gave the NAIC so much responsibility because the legislation it passed will largely be implemented at the state level, and states will have substantial flexibility to create new insurance marketplaces and set and enforce standards. To ensure that the marketplaces be as uniform as possible, Congress gave the NAIC the responsibility of developing specific standards pertaining to the creation of the health insurance "exchanges" created by the new law. Because insurance companies will want to sell their policies through the exchanges, they will be "advising" the NAIC as it goes about its work.

Expenditures on Policyholders Considered a "Loss"

The NAIC also will play a key role in making sure insurers spend at least 80% to 85% of what they collect in premiums on medical care for their policyholders, as the new law requires. The amount insurers pay for care is called the medical-loss ratio (MLR). (It's telling that insurers consider the amount of premium dollars they spend on medical care a loss.) The average medical-loss ratio was 95% in 1993, meaning that 95 cents of every premium dollar insurers collected was paid out in claims. By 2008, the average MLR had dropped to around 80%. At many insurers, the MLR often dips into the 70s or lower.

The Devil is in the Definitions

The insurance industry tried unsuccessfully to strip the minimum medical-loss ratio provision from the bill. It wanted to have the freedom to keep spending less and less on medical care because every dollar not paid out in claims is a dollar that can be used instead to increase profits and to pay CEOs millions of dollars every year. Having lost the battle on Capitol Hill, the insurers are now turning their attention to the NAIC, which Congress gave the responsibility of determining the nitty-gritty details of how insurers will have to comply with the law. Rest assured that the insurers will be pulling out all the stops to persuade the insurance commissioners to make it easy for them to meet the requirements of the new law by manipulating the definition of medical care. One of the things insurers will try to do, for example, is to get the NAIC to let them shift a lot of what insurers now count as administrative expenses into their medical expense category. If that happens, the insurers will look like they're suddenly spending more on medical care without changing anything at all.

The law also requires the NAIC to help the Department of Health and Human Services develop numerous other regulations, ranging from making sure that documents pertaining to benefits and coverage limitations be standard throughout the industry, to determining how health insurance can be sold across state lines while maintaining consumer protections.

Watching Out for the Consumer's Best Interests

To ensure that consumers' interests are at least taken into consideration as the NAIC fulfills its mission, the organization several years ago established a consumer liaison committee. This year the NAIC expanded the committee to include 29 consumer representatives from across the country. I am honored to be one of them, representing the Center for Media and Democracy [5]. Like the commissioners, my colleagues and I are vastly outnumbered by the hundreds of insurance industry executives here at the Denver meeting, but at least we have seats at the table.

During the weeks and months ahead, I will try to keep you informed of how the NAIC fulfills its obligations under the new law. It doesn't have a lot of time to get everything done. In order to provide the states with enough time to prepare for implementation of health care reform, HHS has to have regulations and standards in place within the next 12 to 15 months, if not sooner, which means the NAIC will need to complete a tremendous amount of work in a short period of time.

At a meeting with the commissioners this afternoon (Friday, March 26), we stressed how essential it is that the consumer perspective not get lost as the NAIC rushes to get the work done. We asked specifically that the NAIC:

• create a publicly-accessible "plan of action" developed with input from consumer representatives;
• fully incorporate consumer advocates into the NAIC health reform work plan;
• prioritize their tasks based on the needs of consumers; and
• significantly expand consumer participation at NAIC proceedings.

Many of the commissioners -- in particular Mila Kofman of Maine, who once served as a consumer representative, and Joel Ario of my state of Pennsylvania -- expressed support for our requests. We're hopeful.

Others Who Are Helping

I am in very good company on the NAIC consumer liaison committee, by the way. I'm honored to be a part of the group and will do my best to make sure the regulations the NAIC develops are not skewed in the industry's favor. Here are the other members:

• Elizabeth Abbott, Health Access (California)
• Stephen Alexander, Insurance Consumer Advocate and Actuary (Florida)
• Amy Bach, United Policyholders (California)
• Deeia Beck, Office of Public Insurance Counsel (Texas)
• Brendan Bridgeland, Center for Insurance Research
• Bonnie Burns, California Health Advocates
• Kimberly Calder, National Multiple Sclerosis Society
• Sabrina Corlette, National Partnership for Women and Familes
• Brenda Cude, University of Georgia
• Stephen Finan, American Cancer Society Cancer Action Network
• Evelyn DeCalos Gay (Langga), Georgia Legal Services Elder Rights Project
• Howard Goldblatt, Coalition Against Insurance Fraud
• Melvin Butch Hollowell, Michigan Insurance Consumer Advocate
• Bonita Kallestad, Mid-Minnesota Legal Assistance, Western Minnesota Legal Services
• Timothy Jost, Washington & Lee University
• Karrol Kitt, The University of Texas at Austin
• Peter Kochenburger, University of Connecticut School of Law
• Sonja Larkin-Thorne, Consumer Advocate (Connecticut)
• Kevin Lucia, Georgetown University Health Policy Institute
• Georgia Maheras, Health Care for All (Massachusetts)
• Stacey Pogue, Center for Public Policy Priorities (Texas)
• Lynn Quigley, Consumers Union
• Barbara Rea, Equality State Policy Center (Wyoming)
• Mark Schoeberl, American Heart Association
• Dan Schwarcz, University of Minnesota Law School
• Naomi Senkeeto, American Diabetes Association
• Barbara Yondorf, Colorado Health Care Institute