Kansas Insurance Commissioner Sandy Praeger will be among those paying close attention this week when the Senate Finance Committee votes on a compromise health reform bill painstakingly crafted to win the support of President Obama, congressional Democrats and moderate Republicans.
But Praeger, a Republican serving her second term as the state’s insurance regulator, is more than an interested bystander. As chairwoman of the National Association of Insurance Commissioners’ health insurance and managed care committee, she provided input to the Senate panel as it crafted the bill.
In an interview in her office near the Statehouse, Praeger said thanks in large part to the approach taken by Finance Committee Chairman Max Baucus, D-Mont., she believes the compromise bill, which is expected to cost $829 billion over 10 years, has a good chance of winning some bipartisan support.
“I just get this feeling that this could be a watershed moment,” she said.
“I will be so disappointed if they don’t recognize the importance of trying to have a balanced approach,” Praeger said. “You know, politics is the art of the possible and it’s about compromise. We’ve got a great opportunity here to fix some of the problems that currently exist.”
Audio clips
October 2009 interview with Kansas Insurance Commissioner Sandy Praeger
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Praeger said Democrats who insist that a government-run insurance option be included in the bill risk destroying that balance.
“I think it’s one of the defining issues in terms of getting Republican support,” she said, acknowledging that GOP support may be limited to “the two senators from Maine” (Olympia Snow and Susan Collins).
Significant steps
Even without a public option, Praeger said the Finance Committee bill would help provide more affordable coverage to millions of uninsured Americans and make the marketplace fairer to consumers.
“The most important problem to fix is getting rid of pre-existing condition exclusions,” she said. “You know, it always seemed to me so unfair that people who really needed insurance can’t get it because they’ve got a health condition. Well, we’re all going to have health conditions at some point.”
The bill would immediately create a subsidized high-risk pool for individuals who have been denied coverage because of pre-existing conditions. The high-risk pool would be discontinued in 2013 after reforms are phased in that would prohibit insurance companies from denying coverage based on pre-existing conditions.
It’s important for consumers to understand, Praeger said, that requiring insurance companies cover everyone works only if individuals are also required to purchase coverage. Without such a mandate, people would wait until they were sick to purchase insurance.
“And that would drive everyone’s costs up,” she said. “You can’t buy home owners insurance after your home is on fire.”
A reform idea being advocated by some Republicans — creating a national market for insurance companies to increase competition — also has a downside for consumers, said Praeger, who favors continued state regulation of insurance plans. If allowed to, she said, insurance companies would follow the lead of credit card companies, which tend to base their national operations in states with the most lenient regulations.
“They’ll go to a state that has the least amount of consumer protection and then that plan will be sold in all states,” she said. “So, how do I regulate a plan that I didn’t approve? And, is that fair to our companies here in Kansas that have to abide by our rules?”
To buttress her contention that continued state regulation of insurance plans is in the best interest of consumers, Praeger noted that her office in September recovered nearly $4.5 million in disputed claims. That total — a record for any one month — brings to $13.2 million the amount obtained for consumers so far this year.
Federal reform legislation could also substantially increase the state insurance department’s interaction with consumers. Praeger said the Kansas health insurance exchange — through which individuals and small businesses would be able to choose from several approved plans with varying prices and benefit packages — would also likely be operated by her department.
“The Finance Committee bill does allow the states flexibility in how to set up an exchange and hopefully we would be the entity that would do that,” she said.
NAIC controversy
Praeger’s high-profile role with the NAIC also has put her in the middle of a budding controversy.
National consumer advocates are criticizing provisions in the Finance Committee bill that would give the NAIC rule making authority.
A Sept. 28, 2009 article in the Chicago Tribune focused on the issue, reporting that the bill would give the NAIC responsibility for crafting a model rule governing “health insurance rating, issuance and marketing requirements” that would become “the new federal minimum standard” without congressional approval.
California Lt. Gov. John Garamendi, a former state insurance commissioner, questioned the arrangement charging that the NAIC “is clearly an organization that is dominated by the insurance industry.”
J. Robert Hunter, insurance director of the Consumer Federation of America, also objected, noting that the NAIC wasn’t subject to open meetings and public records laws.
Praeger dismissed the criticism, saying that the NAIC has long played a role in developing regulations.
“We would just be doing what we’ve been doing, which is providing advice and responding to their technical questions when they ask them,” she said. “It would be very similar.”
But consumer advocates continue to be troubled by what they perceive as the lack of an arms-length relationship between NAIC and the insurance industry. They cite the departure of top NAIC officials for jobs in the industry as evidence.
In response, Praeger said she doesn’t think the association’s ties to the industry are as close as they once were.
Document
Sandy Praeger’s testimony to the Senate Finance Committee’s May 2009 roundtable discussion on expanding health care coverage
“I think the culture at NAIC has changed over the years,” she said. “I think some of the criticism may go back 15 to 20 years ago when maybe there was a cozier relationship. I just look at my colleagues at the NAIC today and I don’t see that.”
-Jim McLean is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at jmclean@khi.org or at 785-233-5443, ext. 110.