Health Insurance: How Health Care Reform May Affect State Regulation

GAO discussed states' regulation of health insurance and how proposed health care reforms could affect state health insurance regulation. GAO noted that: (1) only about 24 percent of U.S. national health expenditures are paid by state-regulated health insurers; (2) state insurance agencies commit 4 to 57 percent of their budgets to health insurance regulation; (3) many states cannot estimate the number of full-time staff involved in regulating health insurance; (4) recently adopted state reforms to improve the availability and affordability of health insurance to small groups has increased the strain on resources; (5) state regulatory activities include monitoring insurers' financial solvency, reviewing health insurance premium rates and policies, and investigating consumer complaints and insurer market practices; (6) states may have to perform new regulatory tasks and regulate new organizations under proposed health care reforms; (7) the states' roles are unclear under health care reform and do not specify solvency standards and risk adjustment requirements, or how to establish guaranty funds and monitoring functions; and (8) the health care reform proposals shift some regulatory and complaint-processing functions to health alliances or purchasing cooperatives.