Summary: Although state insurance departments are responsible for overseeing health insurers and protecting consumers, their authority extends over only part of the market and varies widely among states. Moreover, more and more states have elected to self-insure their health plans under the Employee Retirement Income Security Act of 1974, thereby avoiding state regulation. About 24 percent of health care is now paid for by private health insurance that is regulated by state insurance departments. Although the National Association of Insurance Commissioners has tried to establish a uniform, nationwide system of insurance regulation, it has no authority to require states to adopt its model policies; this responsibility falls to state legislatures. The resources that state legislatures allocate to their insurance departments and the proportion that the departments dedicate to regulating health insurance also vary widely among states. State insurance departments work to protect consumers from insurer failures, unfair policy provisions, excessive premiums, and unscrupulous business practices--any of which could financially devastate policyholders. GAO found wide variations in the practices and the procedures that states use to monitor insurer solvency, approve health insurance premium rates and policy forms, and respond to consumer complaints. As Congress reviews the various proposals for health care reform, it needs to consider what role, if any, state insurance departments will play in enforcing new requirements that may be imposed on health insurers.
