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For Insurers, There's a New Sheriff in Town

By John Reichard, CQ HealthBeat Editor

April 29, 2010 -- For those used to the old world order of insurance regulation, changes now underway at the Department of Health and Human Services might seem surreal — but absent a repeal of the overhaul law a few years down the road, they are very much the way things are now.

While the feds have increasingly played a role in recent years in overseeing health insurers, that oversight by and large has been the province of state regulators. But the creation by the overhaul law (PL 111-148) of a new Office of Consumer Information and Oversight at HHS is the very embodiment of how much bigger the federal role has become.

An organization chart of the new entity (see below) illustrates all of its powers. Headed by Jay Angoff, a former public interest lawyer and consumer advocate in battles with insurance companies, the office reports to HHS Secretary Kathleen Sebelius. Both understand intimately how the current regulatory structure works; Sebelius was the state insurance commissioner in Kansas and Angoff served in that role in Missouri.

Reporting to Angoff are the Office of Oversight, the Office of Insurance Programs, the Office of Consumer Support and the Office of Health Insurance Exchanges. The oversight office will implement and enforce new regulations such as those requiring that large insurers pay out 85 percent of the premium dollar for medical care and that they allow adult children to remain on their parents' health plans until age 26. In states that do not now perform such functions, the office also will review insurance rate increases and flag those that it views as unreasonable.

The Office of Insurance Programs will administer the high-risk pool program and the retiree reinsurance program, which aims to make premiums more affordable for the nearly elderly. The Office of Consumer Support is responsible for a Web site that will allow consumers to compare premiums charged by insurance, and for issuing consumer assistance grants to the states. And the Office of Health Insurance Exchanges will develop and implement policies and rules governing insurance exchanges in the 50 states and oversee exchange operations.

All of these functions are likely to require large numbers of new employees. Sebelius noted after a recent hearing that HHS has $1 billion in fiscal 2010 to implement the overhaul law. However, appropriator Rep. David Obey, D-Wis., who chaired the hearing, offered no assurances regarding funding levels in fiscal 2011.

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