Minnesota Governor Proposes Interstate Health Compact

Minnesota Gov. Tim Pawlenty is pitching the idea of a 50-state health insurance compact in a letter to his fellow governors.

Pawlenty said such an entity would be modeled after the Interstate Insurance Product Regulation Commission. The proposed Interstate Health Insurance Compact would allow participating states to share common regulatory standards and facilitate the purchase of health insurance across state lines.

The existing insurance compact enables state regulators to adopt uniform standards for life insurance, annuity, disability and long-term care insurance products. It claims almost 60% of U.S. premium volume for individual and group life, annuity, long-term care and disability. The IIPRC, which met its operational threshold in 2006, now has 36 member states (BestWire, Aug. 3, 2009).

"Like life insurance, health insurance is an area that would benefit from a consistent set of standards to enable true market competition to flourish nationally," Pawlenty wrote. "Those standards should be informed by the collective wisdom of those closest to consumers -- states and their insurance regulators."

Pawlenty recently announced several new health care initiatives for Minnesota, including one that would change state law to allow consumers to purchase health insurance policies sold in other states. According to his announcement, strict conditions would include: the state insurance regulator where the company is domiciled must be accredited by the National Association of Insurance Commissioners; the insurance company must have a certificate of authority in Minnesota; the insurer must abide by Minnesota consumer protection laws; and the company must be subject to standard Minnesota fees and taxes.

The NAIC would have a formal role in the health care reform bill sponsored by Senate Finance Committee Chairman Max Baucus, D-Mont. Among other provisions, the bill would give the NAIC until 2013 to establish rules for the creation of new "health care choice compacts" to allow insurance companies to sell health insurance products across state lines. The NAIC would also be involved in developing standards for implementing national health insurance plans that could be offered across state lines (BestWire, Sept. 17, 2009).