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Health care overhaul legislation from President Barack Obama’s congressional allies would create a federal insurance czar with sweeping new powers to oversee medical plans nationwide, an idea already drawing fierce criticism.
State insurance commissioners are objecting, saying it would duplicate what they now do without offering any better protection for consumers. Conservatives are calling it a textbook example of a big government mentality.
The issue could flare as lawmakers push to meet an ambitious schedule for floor votes on complex health care legislation before the August congressional recess.
Like the notion of a government insurance plan to compete with private companies, designating a single, powerful official to oversee the market goes to the heart of the federal role.
The insurance czar, known as the Health Choices Commissioner, would head a new independent agency called for in the 800-page draft bill released by House Democratic leaders. The Health Choices Administration would regulate a revamped insurance marketplace and be expected to deliver Obama’s promise of affordable coverage for all. Decisions made in the commissioner’s office would reverberate not just through insurance company boardrooms, but family kitchens as well.
Some experienced regulators are raising questions. State regulators, who traditionally have overseen the health insurance industry, say a federal czar isn’t needed.
"We have concerns that a federal commissioner would not provide adequate protection for our consumers, and that the bill as drafted duplicates functions that exist in states across the nation," said Oklahoma Insurance Commissioner Kim Holland.
Insurance commissioners may be divided on how to overhaul the nation’s health care system, but "one thing we all agree on is that state-based regulation works," said Holland, a Democrat.
"It has proven to be the most effective way to protect consumers against wrongdoing," she added, speaking on behalf of the National Association of Insurance Commissioners.
A consumer group is defending the idea, saying not every state does a good job of overseeing the insurance industry. "We need a better health care cop on the beat," said William Vaughan, a senior policy analyst with Consumers Union, publisher of Consumer Reports. "There needs to be a federal insurance commissioner to keep insurers on the straight and narrow."
But conservatives call the proposal a federal power grab.
"This is not a federal-state partnership — it is federal domination of the states," Heritage Foundation health policy expert Robert Moffit said in recent congressional testimony.
The legislation spells out a long list of responsibilities for the health commissioner, who would be appointed directly by the president.
The commissioner and the health choices agency would oversee something called the health insurance exchange. That’s a new kind of national purchasing pool through which individuals and small businesses could pick medical coverage from a range of private plans and a government-sponsored alternative.
The House legislation would eventually open up the insurance exchange to all employers. The commissioner would get to decide when that happens.
Other decisions would be equally important to consumers and insurance companies alike.
The agency would decide who qualifies for federal subsidies to help buy coverage. The commissioner would set standards for handling grievances and appeals for claims denied.
The commissioner would set plan benefits for each year and police insurance marketing campaigns. The agency would enforce a requirement that the insurers spend on medical care at least 85 percent of what they collect in premiums.
The legislation would also create a federal health insurance ombudsman to act as a consumer advocate. The offices of the commissioner and the ombudsman would bring to five the number of federal agencies involved with health insurance regulation — in addition to the 50 state insurance commissioners. The other federal agencies are the departments of Health and Human Services, Labor and Treasury.
Proponents of having a federal commissioner say a national health insurance purchasing pool needs a regulator at the federal level. "If we’re going to have a national insurance exchange, you can’t have it run by 50 regulators in the states," said Vaughan.
It’s unclear whether the Senate will follow the House’s lead on the federal health insurance czar. Senators are talking about setting federal standards for health insurance, but delegating enforcement to the states.