Capiol Hill, Saipan – The Commonwealth has been struggling to assess the impending impact of the recently enacted national healthcare act. On a recent trip to Seattle, CNMI Secretary of Commerce Michael Ada, who also serves as the CNMI’s Insurance Commissioner, attended the National Association of Insurance Commissioners (NAIC) Summer Meeting where the implementation of the healthcare reform law was the center of the quarterly meeting discussions. The NAIC has provided the CNMI with a white paper which assessed the impact of the healthcare act on the insular areas, while the Congressional Research Center further clarified relevant provisions of the laws to the CNMI.
While the legal analysis has been performed by both the NAIC and Congressional Research Center, Ada believes that there still remains outstanding issues that warrant clarification. Among his primary concerns are the provisions which the CNMI is subject to in terms of data collection and unintended consequences that stem from the CNMI’s unique differences in healthcare delivery and insurance costs. The national healthcare reform act impacts healthcare delivery and availability of affordable health insurance coverage.
While the Secretary of Public Health, Joseph Kevin Villagomez serves as the CNMI’s State Lead on the Healthcare reforms, DPH has partnered with Commerce to address the issues facing availability of healthcare coverage. The CNMI’s insurance industry has also weighed in on the discussion as healthcare insurers will be facing dramatic changes that will impact operations in a significant way.
“With the mandates that the laws place on insurance companies, operations will be significantly impacted. Two of the largest impacts are the increase in Medicaid funding availability and the Medical Loss Ratio (MLR) that are applied to healthcare insurers. With an increase in Medicaid funding and expansion of eligibility, we anticipate that a large portion of folks who are currently insured through private insurance will qualify for Medicaid and opt to leave private healthcare insurance. This expands the Medicaid base and shrinks the marketplace for private insurance firms. In addition, the MLR places significant restrictions on operations, which impacts profitability. The fear is that the law will essentially drive healthcare insurers out of business. While it is my duty to ensure consumer protection on insurance products, it is also my mandate to ensure that the industry is protected,” said Ada.
Deputy Secretary of Commerce, Sixto Igisomar, who joined Ada in the Seattle meeting, identified two grant applications that the Department of Commerce is working on to address the issues. One of the grant applications allows for a minimum of $1 million to aid in developing a rate review office, while the other establishes an Insurance Ombudsman office.
“The rate review grant is one that DHHS has indicated they will re-open specifically for the insular areas as the initial funding announcement was limited to 51 of the 56 Insurance Commissioners. During the NAIC Western Zone meetings, Secretary Ada and Guam Insurance Commissioner, John Camacho, advocated for inclusion in the funding. This grant will allow us to establish a rate review office, which will evaluate MLR’s for healthcare insurers, and allow for electronic form filings. We hope to staff this office with 5 FTE’s for a period of two years. The Ombudsman grant is due in early September and will be utilized to hire an Insurance Ombudsman, who will be tasked as the central point for all healthcare insurance questions. We are partnering with DPH to strategize on the best way to address the implementation of these offices in relation to the changes in law”, said Igisomar.
Rep. Edmund Villagomez, Chairman of the Commerce and Tourism Committee, also joined Ada and Igismoar for the NAIC Summer meeting. During his orientation to the NAIC, Rep. Villagomez was alerted to many of the issues relevant to the insurance industry in the CNMI.
“The issue of financial solvency struck me as the most pressing concern facing the CNMI insurance industry as a whole. In my discussions with Secretary Ada and Deputy Secretary Igisomar, the lack of resources provided to the Department of Commerce to conduct audits on insurance companies pose a large risk to our community. The Department of Commerce has two full time staff in the Insurance division, along with Secretary Ada and Deputy Secretary Igisomar to provide oversight. This concerns me because there are some firms in the CNMI who may not be able to cover liabilities which would be due to our citizens who carry policies with these firms. While the government would like to do something about this, there are not enough local resources to address this issue,” said Villagomez.
Igisomar stressed Commerce’s position on financial solvency by denying several Insurance Certifications for bid and performance bonds on ARRA related projects. He has required proof of re-insurance for carriers seeking to bond projects in an effort to ensure financial capacity to cover liabilities should the policy get called. This was welcomed news at the Northern Marianas Insurance Association, in which Ada and Igisomar attended during their August meeting.
“Secretary Ada has made it clear that he is not going to rubber stamp his signature on requests coming through simply because you have a license to offer insurance in the CNMI. He wants to make sure firms who are taking on additional exposure, actually have the financial capacity to cover those liabilities,” said Igisomar.
Villagomez, who introduced a bill to have a percentage of the fees collected for the CNMI insurance licenses to pay for the CNMI’s dues to the NAIC, was struck by the benefit given to the CNMI through the NAIC. The CNMI pays $8,000.00 annually to the NAIC and is provided $13,000.00 in grant funding specifically to the CNMI Insurance Office to pay for training, certifications, technical assistance, and travel. In addition, the NAIC provides for all expenses for the Insurance Commissioner and one State Legislator. The CNMI can also apply for additional funding from an annual pool of $250,000.00 from the NAIC. All expenses for the CNMI to attend the Summer National Meeting were paid for through grant funding by the NAIC.
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