Doing Some Good With This Silly OPM Exchange Idea: National Oversight For Nationwide Plans

One of the ideas currently being floated around right now is to have the OPM (Office of Personnel Management) create an exchange for private, non-profit insurance plans that would be sold within all the state-based exchanges. As a new idea, I don't think the proposal has any merit. There would be some value in having the OPM run all the new exchanges like this, but only running an exchange within an exchange seems unworkable. Why would any insurance plan sponsor agree to much higher regulation if it could have the same access to the same customers without taking part?

It is possible that this proposal will at least do some good by fixing one of the bigger problems I have with the current Senate bill. Currently, the bill would allow for those “nationwide plans” that the insurance lobby really wants. This would allow insurance companies based in one state with very low standards to sell in every other state “nationwide plans” that only meet the new federal minimum standard for benefit coverage. These plans would be given permission by the federal government to circumvent all state laws oncerning what insurance companies must cover.

There are two huge problems with this. One is that it effectively guts state insurance regulation of coverage. Like with credit card regulation, it could create a race to the bottom, with all insurance based in the handful of the least-well-regulated states. The other major problem is that there is no federal regulator of insurance companies. You could end up with the Utah insurance commissioner needing to effectively be the insurance commissioner for the entire country.

If insurance is going to be sold nationally, it then needs to be regulated and overseen nationally. I would hope that the federally run OPM exchange would replace the current “nationwide plan” language. The idea is that only non-profit insurance plans that meet the higher OPM standards and agree to have OPM oversight would be allowed to sell insurance across state lines which ignores local coverage regulation.

This is not a perfect fix to the serious problem of “nationwide plans.” It would at least ensure there was a very high floor for these nationwide plans, and give at least one federal agency oversight. As a side benefit, this would create an incentive for insurance plans to take part in the OPM exchange (currently I don't see why any plan would agree to the higher OPM regulation unless it gave some benefit like this). As a substitute for the public option, this OPM exchange is worthless, but I strongly hope this OPM exchange is structured to at least help fix the terrible, state-regulation-gutting “nationwide plan” idea. Maybe this silly idea could do a small amount of good.

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