Loosen up Insurance Market, Pawlenty Says

Cross-posted from State House Call.

By David Strom

The idea of allowing consumers to purchase health insurance across State lines got a boost on Tuesday.

Minnesota Gov. Tim Pawlenty unveiled a legislative initiative to allow just that, setting off what is sure to be a lively debate in both the Minnesota Legislature and on Capitol Hill.

Pawlenty’s proposal would allow Minnesota consumers to expand their health insurance options beyond those currently available in Minnesota. Currently just three insurers cover 80% of Minnesotans in the private health insurance market. And due to Minnesota law all insurers must be nonprofit companies subject to strict State regulation.

In keeping with Minnesota’s tradition of strong consumer protection Pawlenty is not proposing to fully open the health insurance marketplace to all comers. Instead the proposal places strict limits on what policies will be offered in the state. Provisions of the plan include:

• the state insurance regulator where the company is based must be accredited by the National Association of Insurance Commissioners;

• the insurance company must have a certificate of authority in Minnesota;

• the insurance regulator in the state where the company is based must review and approve policy forms;

• the insurance company must agree to abide by Minnesota’s claims practices and other consumer protection laws; and

• the insurance company would be subject to Minnesota fees and taxes.

Further restricting the pool of available insurers, Pawlenty is proposing that only policies approved in the 20 States deemed most effective at regulating insurance will be eligible for sale in Minnesota. Precisely how that determination will be made is not clear at this time.

Unsurprisingly, Minnesota’s Democrats wasted no time taking aim at the proposal. A statement from Brian Melendez, Chair of the Minnesota Democratic-Farmer-Labor party (Minnesota’s Democrats) took direct aim at Pawlenty:

“The governor’s efforts to protect HMOs and maintain the status quo on health care are neither new nor innovative, and would not work for the people of Minnesota. Gov. Pawlenty’s more-of-the-same attitude has become his trademark, and today’s rehash of previously failed health-care initiatives shows no leadership, no courage, and no foresight — three qualities that are sorely lacking in this governorship. Sometimes you really can’t teach an old dog new tricks.”

I’m not exactly sure how proposing something never tried in Minnesota is “maintain[ing] the status quo,” but then again it’s been years since I thought like a liberal.


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