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Meet the bureaucrats now deciding Obamacare’s fate

Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition or sign uphere to receive it straight to your inbox. read previous columns here.

Health Reform Watch's Fix Tracker! 

President Obama has asked states to allow insurance companies to renew non-Obamacare compliant plans through 2014. We'll be using this tracker to keep a running list of how states are deciding. A more thorough version of this tracker exists here. And let us know if your state is missing!

Allowing late renewals: Hawaii, Ohio, N.C., Fla., Ky., Tex.

Not allowing late renewals: R.I., Vt., Wash.

Still deciding: Calif., Colo., D.C., Ind., Miss., Ore., S.D.

What price a buggy website? (Photo by Mike Segar/Reuters)
What price a buggy Web site? (Mike Segar/Reuters)

Getting Jim Donelon on the phone is an incredibly difficult task.

I know because I spent about 36 hours trying to do so. And it took me three tries over the course of two days to get through to the Louisiana regulator, who found a spare moment around 7:30 p.m. on a Friday.

We chatted briefly before Donelon put me on hold: He had spotted one of his colleagues on "On the Record with Greta Van Susteren" and wanted to keep an eye on the interview.

Donelon is the president of the National Association of Insurance Commissioners, a group of state regulators that, on Thursday, was made a crucial player in the fight over cancellation notices.

It's up to Donelon's group whether or not to allow President Obama's proposed cancellation 'fix' -- giving insurers another year to sell non-complaint policies -- to move forward.

Overnight, the insurance commissioners became gatekeepers for a crucial White House priority -- and a target of massive media attention. The regulators who spend most their days pouring over insurance filings are, all of a sudden, turning up in prime-time television.

"All day long I've been getting calls from reporters," Donelon said.

Asked if he could remember a time when the insurance commissioners had received so much attention, Donelon said, "None, ever." He noted that he's served in this position for seven years. "It harkens back, maybe, to staffing Hurricane Katrina. That's the most similar experience I can think of," he said.

For as long as companies have sold insurance products, the regulation has typically occurred at the state level. This, in a way, makes sense: Insurers tend to sell to people in specific geographic areas, making it an industry that would lend itself to local oversight.

New Hampshire appointed the first insurance regulator in 1851 (according to an official NAIC history of state insurance regulation) and, in 1871, the National Association of Insurance Commissioners was founded. It is the oldest association of state government officials out there.

Insurance regulators arguably have one key goal to their work: Preventing insurers from going bankrupt. That's what happens when insurers don't have enough money to pay out the claims that subscribers submit.

Much of an insurance regulator's work, then, is tied up in making sure that insurers have enough money in the bank to stay solvent. They review reams of filings from insurance companies each year, which includes data on the revenue they plan to take in (in the form of premiums) and the cash they have on hand (their reserves).

This is, unsurprisingly, relatively dull stuff. The NAIC meets three times a year in bland hotels across the country, the type of conferences where you sit in ballrooms and don't see sunlight for a few days. I know, because I spent a few years attending them when I covered the insurance industry.

There, they hold hours-long meetings with titles like "Principal-Based Reserving" and "Reinsurance Financial Analysis." That latter discussion is apparently so racy that only the insurance commissioners, and not their staff nor the public, can attend.

The insurance commissioners did play a huge role in one major health-care regulation that they called the "medical loss ratio" (and was later re-branded by the White House as the "80/20 rule.") This is the health law regulation that requires insurers to spend at least 80 percent of subscriber premiums on health-care costs rather than administrative work or profits. The health law tasked the NAIC with deciding what counts as a medical cost.

This was a big policy decision but also one that regulators had months to make. They held weekly conference calls and finished their work with little fanfare. Anything called the medical loss ratio is unlikely to make front-page news.

That's completely different from the current decision, which took the regulators by surprise and has major political consequences.

Donelon only learned of the president's announcement moments before the rest of the public, in a phone call with home state Sen. Mary Landrieu (D- La.). She moved up a pre-scheduled call in the afternoon, to give him a heads up on the pending policy announcement.

Others didn't get any heads up at all: Montana's insurance regulator saw the president on the television in a coffee shop, and Washington's commissioner learned about it when he was at the gym.

They quickly scrambled to organize phone meetings. "We went into national conference calls, two of them, to cobble together our response," he recounts of Thursday.

Donelon says that state and federal NAIC officials are still trying to figure out what the changes would mean; he hopes to have some form of national guidance out to regulators later this week. While pundits here in Washington worry about what his decision means for Obama's presidency and his poll numbers, Donelon's biggest concern is...solvency.

Yes, solvency. It's a No. 1 concern for the regulators because reversing the cancellation notices could put them closer to insolvency, as the premiums in the exchange would be unlikely to cover a sicker subscriber group.

"While the big, national companies can weather that, a smaller one might not," Donelon explained. "My Blue down here is big and strong and financially able to take a chance. These small companies may not. So from a solvency point of view, that is what would mostly concern me."

This was right about when Donelon put me on hold for about 10 minutes, to watch his Kansas counterpart, commissioner Sandy Praeger, appear on "On the Record with Greta Van Susteren." He apologized, noting that insurance commissioners don't typically turn up on prime-time television.

KLIFF NOTES: Top health policy reads from around the Web.

D.C.'s insurance commissioner was fired the day after criticizing the Obama plan. "White said the mayoral deputy never said that he was being asked to leave because of his Thursday statement on health care. But he said the timing was hard to ignore. Roughly 24 hours later, White said, he was “basically being told, ‘Thanks, but no thanks.’” White was one of the first insurance commissioners in the nation last week to push back against Obama’s attempt to smooth over part of the botched rollout of the Affordable Care Act: millions of unexpected cancellations of insurance plans." Aaron C. Davis in The Washington Post

The White House's goal: Have work for 80 percent of shoppers. "The Obama administration will consider the new federal insurance marketplace a success if 80 percent of users can buy health-care plans online, according to government and industry officials familiar with the project. The goal for how many people should be able to make it through the insurance exchange is an internal target that administration officials have not made public. It acknowledges that as many as one in five Americans who try to use the Web site to buy insurance will be unable to do so." Amy Goldstein and Juliet Eilperin in The Washington Post.



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