Consumer Watchdog – Legislators Blast Interstate Health Care Proposal

WASHINGTON, D.C. -- A provision in both House and Senate healthcare legislation that would allow insurers to sell healthcare interstate is coming under fire from liberal members of the House from Maine and California.

And in the latest development on healthcare reform legislation, Senate majority leader Harry Reid, D-Nev., today vowed in a speech on the Senate floor to pass the Senate version of reform legislation before Congress departs before Christmas for its holiday recess.

“We’re going to finish this health care bill before we leave here,” he said. 

“For nearly an entire year, we have reached out to the other side, offered Republicans a seat at the table and negotiated in good faith,” he said. Now, he added, “we’re closer than ever to fixing a badly broken system and doing more to make sure every American can afford to live a healthy life than this country has done in decades.”

The interstate compact is a provision in the Senate bill that would allow insurers to sell policies in any state while subject only to the insurer’s domicile state regulations.

The House bill, H.R. 3962, would allow states to decide among themselves whose regulations would govern.

In a letter to both Senate and House leaders, 31 Democratic members of the House from Maine and California said if this provision passes, key patient rights mandated by laws in one state would be lost if an insurer domiciled in another jurisdiction could disregard that state’s benefit mandates.

The letter says that the House bill’s interstate compact provision “could make the regulations in the consumer-friendly state irrelevant.”

Practically speaking, “insurers will domicile their plans in states with less stringent regulations and market to the population in more protective states like ours, just like nationally chartered banks have done.” the letter said.

The letter maintains that interstate compact provisions in both bills are a “race to the bottom,” using the same verbiage that Consumer Watchdog, a group based in California, uses to argue against an optional federal charter for insurers. 

A Consumer Watchdog official said 17 states that have more than 50 health benefit mandates in state law have the most to lose under the pre-emption provisions. Those states represent 54% of the U.S. population, according to Jerry Flanagan, healthcare policy director for Consumer Watchdog, in a statement released in connection with the legislators’ letter.

Consumer Watchdog is also concerned about an amendment sponsored by Sen. Olympia Snowe, R-Maine, and Sen. Blanche Lincoln, D-Ark., that would bar a state from opting out of any nationwide plan sold by an insurer.

“The Snowe amendment would make a difficult task impossible,” Flanagan said.

He explained that under the current version of the bill, state legislators may ostensibly refuse to allow insurance companies to sell bare-bones nationwide policies in their state. “However, the 1,000 health insurance lobbyists estimated to be working the federal health reform bill, and the industry’s unlimited capacity to buy votes with campaign contributions, would be marshaled to advance the insurers’ interest at the state level,” Flanagan argued.