Transparency Bill Would Shine Light on Tens Of Millions in Fees Paid for Pa Insurance Department’s Outside Consultants

This month, the Pennsylvania legislature is considering measures to shine a bright light on the untold millions of dollars the Pennsylvania Insurance Department (“Department”) is charging Pennsylvania-based insurance companies to pay for the Department’s outside consultants.  Under a bill that has passed the House and is awaiting action by the Senate, the Department would be required to disclose how much insurance companies are paying for the Department’s consultants to conduct examinations of the companies. The consultant fees absorbed by the Pennsylvania-based companies are believed to be in excess of tens of millions of dollars each year, but the exact amount remains a mystery because they are paid directly to the consultants and not accounted for in the Insurance Department’s budget or elsewhere. Industry trade groups have been calling for transparency about these exponentially increasing costs, arguing that there is already no cap on them, and without even knowing how much is being charged to the companies for these contracted regulatory functions, there cannot be complete accountability for the costs and efficiencies of the Department’s work.  These undisclosed expenses are ultimately passed down to consumers and, to the extent they contribute to a more expensive regulatory system than in other states, may have the effect of making Pennsylvania insurance companies less competitive than their out-of-state neighbors.

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F.I.O. Finally Makes its Recommendation: “Hybrid” State-Federal Insurance Regulation

Back in June 2011, we reported here that Congress’ brand new creation known as the “Federal Insurance Office” (FIO) had found its first Director in former Illinois regulator Michael McRaith.  We cautiously anticipated then the issuance of the FIO’s initial report to Congress, scheduled for January, 2012, regarding the effectiveness of the state-based system of insurance regulation, as well as recommendations for changes and improvements.  Industry stakeholders speculated then about what the establishment of this new federal bureaucracy might signal and what role the Feds might be looking to assume in their industry in the wake of scares about financial instabilities surrounding major U.S. insurers. The decades-old debates about federalism in the regulation of insurance were sparked anew and we waited for word from Director McRaith and his Office.  And we waited.  A year passed and we waited some more.  Another year passed and the Feds rolled out their health insurance marketplace and that went…well, they did roll it out!  You may have heard.

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New law expands Insurance Department authority to review health insurance rates

Small group plan health insurance rate increases of more than 10% must be filed and approved by the Pennsylvania Insurance Department under a new law signed by Governor Corbett in late December, 2011.  The expanded authority under Act 134 to review small group health plan rates in Pennsylvania comes in response to provisions in the Patient Protection and Affordable Care Act (PPACA) that give the federal government the authority to disapprove such increases unless they are reviewed at the state level.

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Pa. Insurance Department encourages insurance producers to help all flood victims

The Pennsylvania Insurance Department has delivered a clear message to all licensed insurance producers: you are expected to provide guidance to flood victims, even if they have no insurance to cover their losses.

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Pennsylvania officials confronting tough issues in health insurance

Few current social or political topics stir the emotions quite as much as health care reform.  Whether you believe that the Patient Protection and Affordable Care Act (PPACA) is a sign of imminent and apocalyptic American socialism or an important step towards ensuring that all Americans have access to basic health care, nothing can ruin a tranquil Sunday dinner at Grandma’s house quicker than prodding Uncle Charlie into a debate about whether Uncle Sam is taking over our health care system.  But politics aside, if anyone was naïve enough to hope that the health care debate ended when President Obama signed the bill into law in March, 2010, they are facing the reality that 18 months later there still seem to be many more questions than answers when it comes to the future of health insurance in America.  And in Pennsylvania, while state government officials are busy deciphering how their citizens can get the most out of the PPACA, they are also distracted with having to deal with another potentially critical health care problem in the western half of the state - where an impasse between the area’s largest hospital system and the dominant health insurance company threatens access to doctors and hospitals for millions of patients who already have good insurance.

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Medical professional liability insurance limits will remain unchanged in Pennsylvania

Pennsylvania Insurance Commissioner Mike Consedine today made public his determination that the coverage limits required by law for medical professional liability will remain unchanged for 2012.  In an announcement much-anticipated by insurers and health care providers, Commissioner Consedine indicated that “it cannot be definitively found that additional basic insurance capacity is presently available and as such…limits of coverage for the primary market and Mcare shall remain unchanged.”

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New Federal Insurance Office gets a Director, but will it get regulatory authority?

 

Michael McRaith officially began his new job earlier this month as the first Director of the Federal Insurance Office (FIO or Office) after serving for the past six years as Director of the Department of Insurance in President Obama’s home state of Illinois.  The FIO was established by the Dodd-Frank financial reform legislation of 2010 as an office within the U.S. Department of the Treasury, and represents a part of the Congressional response to concerns about the financial stability of certain large domestic insurers and their subsequent taxpayer bailouts in 2008 and 2009.  Director McRaith will report to Treasury Secretary Timothy Geithner.

At this time the FIO has only an advisory role and monitoring authority over the business of insurance, while regulatory authority remains vested at the state level.  However, the establishment of the Office has caused a great deal of speculation, both within the industry and among state regulators, regarding whether it represents a significant first step towards shifting insurance regulation to the federal level in the future.

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