All insurance providers – including life, health and general insurance – will have to be licensed by the Reserve Bank under a new prudential regulatory framework announced today by Finance Minister Michael Cullen.
“This is a major step forward in the regulation of the insurance sector and the result of a thorough review of regulations spanning two years. The proposals will encourage the maintenance of a sound and efficient insurance sector that promotes confidence among policyholders,” Dr Cullen said.
“The purpose of licensing is to ensure that insurers are ‘fit for business’ by demonstrating their capacity to manage the business they undertake, identify and manage their risks effectively, and have sufficient financial strength.
“The new legislation and associated details of the new regulatory framework will take time to implement. Legislation will be introduced in 2008, and is expected to be brought into force at some point in 2010.”
As the prudential regulator and supervisor of insurance providers, the Reserve Bank will be the authority that:
• licenses and de-licenses insurers, subject to appropriate checks and balances;
• prescribes and enforces compliance with the regulatory prudential requirements;
• applies fit and proper requirements to directors and senior managers;
• can intervene in the event of a situation of distress or the potential failure of a licensed insurer.
Financial strength ratings, from an approved ratings agency, will be mandatory for insurers. The costs of mandatory ratings are expected to be modest for most insurers relative to their size.
However, as the costs could be more significant for very small providers, insurers with annual gross premium income under $5 million will be exempt from the rating requirements, except for property and disaster insurers who are already required to obtain a rating.
“Ratings provide a powerful tool to assist policyholders, brokers and analysts to distinguish between lower and higher risk insurers and they reduce the need for a more intrusive form of regulation and supervision,” Dr Cullen said.
Reserve Bank governor Alan Bollard said the prudential requirements would not be overly prescriptive and would place emphasis on directors' responsibilities to effectively manage the risks within their businesses.
"The insurance sector is an important part of the financial system which underpins economic activity," Dr Bollard said. "Policyholders need to have confidence in insurance providers that insurance claims will be
honoured. While prudential supervision can never eliminate the possibility of failures within the sector, licensing of all insurance providers helps to ensure that minimum requirements are applied to the sector in a consistent manner."
More detailed information is on the Reserve Bank website (see below).
Wednesday, December 19, 2007
Tuesday, December 18, 2007
Remove barriers to affordable health insurance
Ever wonder why health insurance costs so much in Colorado? Well, maybe it has something to do with the fact that every insurance policy in the state must cover all kinds of services — including professional counseling — deemed unnecessary by many.
In fact, Colorado has 37 of these mandates. Should a resident want to buy a policy that doesn’t cover, say, chiropractor visits, sorry — the government has decided that everyone must have that coverage.
Recently, enthusiasm for universal health-care coverage has swept the nation, with governors in Massachusetts and California leading the way. Maine and Vermont are currently revising their own systems of expanded health-care coverage, and at least eight other states are pursuing similar reforms.
Certainly, the approximately 47 million uninsured in America is a significant problem, but the proposals under consideration do little to address the primary reason for the lack of coverage — very expensive insurance.
And why are those costs spiraling upward, seemingly without limit? One major reason is government meddling in the market for health insurance, particularly through the imposition of restrictive mandates and regulations.
The average state has 36 mandates on an individual health insurance policy. And with each mandate, the cost to the consumer goes up. These mandates often stand in the way of making health insurance more affordable in the first place.
Just as options on a new automobile add to the total cost of the car, so too do insurance mandates.
If affordability and accessibility are the problems behind the number of uninsured, then why haven’t state governments removed the mandates for those who want to buy a basic policy? It’s not just the government’s desire to micromanage — it’s interest-group politics.
Acupuncturists, for example, certainly provide an important pain-relief service to many individuals. But is it really necessary for everyone to have acupuncture coverage whether they want it or not? It would make far more sense to give individuals the freedom to purchase policies that suit their specific needs.
The current system guarantees that everyone pays the highest possible price.
We are covered for things we don’t use. Or if we do take advantage of these mandated benefits, we don’t realize the full cost of the benefit because someone else pays.
But we all indirectly absorb those costs thanks to higher premiums.
The conversation about health-care reform is long overdue, but unfortunately for most consumers, it’s headed in the wrong direction.
Without addressing the high costs of health care, efforts to achieve universal coverage by legislative fiat will fail. Just look at automobile insurance. Even though it is mandatory in all but three states, one in seven drivers on our roads remains uninsured. There’s a better way to expand health-are coverage — through greater purchasing freedom and fewer regulations.
Let’s hope Colorado learns from the heavy-handed approaches of other states and opts for a more effective approach — like ending the silly requirement that all insurance policies cover things like marriage therapy, which most people will never need.
Sally C. Pipes is president and CEO of the Pacific Research Institute. She is a resident of San Francisco.
In fact, Colorado has 37 of these mandates. Should a resident want to buy a policy that doesn’t cover, say, chiropractor visits, sorry — the government has decided that everyone must have that coverage.
Recently, enthusiasm for universal health-care coverage has swept the nation, with governors in Massachusetts and California leading the way. Maine and Vermont are currently revising their own systems of expanded health-care coverage, and at least eight other states are pursuing similar reforms.
Certainly, the approximately 47 million uninsured in America is a significant problem, but the proposals under consideration do little to address the primary reason for the lack of coverage — very expensive insurance.
And why are those costs spiraling upward, seemingly without limit? One major reason is government meddling in the market for health insurance, particularly through the imposition of restrictive mandates and regulations.
The average state has 36 mandates on an individual health insurance policy. And with each mandate, the cost to the consumer goes up. These mandates often stand in the way of making health insurance more affordable in the first place.
Just as options on a new automobile add to the total cost of the car, so too do insurance mandates.
If affordability and accessibility are the problems behind the number of uninsured, then why haven’t state governments removed the mandates for those who want to buy a basic policy? It’s not just the government’s desire to micromanage — it’s interest-group politics.
Acupuncturists, for example, certainly provide an important pain-relief service to many individuals. But is it really necessary for everyone to have acupuncture coverage whether they want it or not? It would make far more sense to give individuals the freedom to purchase policies that suit their specific needs.
The current system guarantees that everyone pays the highest possible price.
We are covered for things we don’t use. Or if we do take advantage of these mandated benefits, we don’t realize the full cost of the benefit because someone else pays.
But we all indirectly absorb those costs thanks to higher premiums.
The conversation about health-care reform is long overdue, but unfortunately for most consumers, it’s headed in the wrong direction.
Without addressing the high costs of health care, efforts to achieve universal coverage by legislative fiat will fail. Just look at automobile insurance. Even though it is mandatory in all but three states, one in seven drivers on our roads remains uninsured. There’s a better way to expand health-are coverage — through greater purchasing freedom and fewer regulations.
Let’s hope Colorado learns from the heavy-handed approaches of other states and opts for a more effective approach — like ending the silly requirement that all insurance policies cover things like marriage therapy, which most people will never need.
Sally C. Pipes is president and CEO of the Pacific Research Institute. She is a resident of San Francisco.
Sunday, December 16, 2007
Health insurance mandate affects all - including immigrants
When the 50-year-old Brazilian painter heard the new state health reform mandates everyone to have health insurance by Dec. 31, the man - who had been uninsured for six years since he immigrated here - felt he had to do something.
An illegal immigrant, the man couldn't do much. Though the mandate applies to everyone, including undocumented immigrants, the new law doesn't offer health insurance programs for them, other than Free Care or MassHealth Limited, for emergency services only.
The man, who identified himself by his first name's initial and last name, A. Ribeiro, thought about continuing going without insurance, but changed his mind when he learned all those uninsured by the end of 2007 could lose their personal income tax exemption for 2007, about $219. The penalty will increase in 2008.
Ribeiro, who pays taxes with an Individual Taxpayer Identification Number (ITIN) in hopes that would help him legalize his situation, signed for both Mass Health Limited and Health Safety Net Pool for low-income people, formerly known as Free Care, for himself, his wife and their three children of ages 23, 17, and 3.
"I'm much more relieved," said Ribeiro of Medford. "I take care of myself so I don't get sick, but it's better to have insurance in case something happens."
Ribeiro signed for insurance at one of four workshops sponsored by a local Brazilian civic association that brought a researcher from Boston University's School of Public Health, Dr. Milagros Abreu, to Framingham. Abreu, who has conducted similar programs for Latinos in East Boston, came on a volunteer basis, hoping she could find funding to continue the program.
The interest has been huge, said Ilma Paixao, a member of Framingham's Brazilian American Association, which spearheaded the workshops with Abreu, because "the need is so great," Paixao said.
Since the workshops began in October, Arlete Falkowski, a volunteer with the association, has taken dozens of calls from people who want to know how the health care reform would affect them.
"People know there is a deadline and a penalty," she said. "But they don't know where to apply, if they qualify or what options are out there."
In a meeting at a Brazilian church in early December, 80 people gathered to listen to Abreu, who explained in Spanish the changes brought by the new laws. A volunteer translated into Portuguese. More than 300 have attended the workshops, and about 150 have applied for health insurance, with help of Abreu's initiative, called the Latino Health Insurance Program. Among those newly insured were legal residents who didn't know they could qualify, families with children born here who were eligible for services, and some illegal immigrants who have gone uninsured for many years.
"Some have never seen a doctor in 15 or 20 years, others travel abroad to seek medical care, and some others seek care at the last minute at the emergency room," said Abreu, who works at BU's Department of Epidemiology. "Our main goal is to make sure they have access to health care where they live. We want to keep our communities healthy. It's for the benefit of everyone."
The new health care reform became law in April 2006, and state officials said it's already achieving its goal of reducing the number of uninsured people in Massachusetts. Lt. Gov Tim Murray announced last week more than 300,000 have enrolled in health insurance programs and said, "health care reform is working." According to a 2006 state survey, there were 372,000 uninsured residents, or 5 percent of the population.
How many of those were illegal immigrants, nobody knows. Confusion about the new laws is still widespread among the immigrant community. To help them, an interfaith group visited two Latino churches in Framingham, St. Tarcisius, which offers masses in Portuguese for the Brazilian community, and St. Stephen's, which offers masses in Spanish for the Hispanic population. The sessions held in September and October were well attended, said Les Holtzblatt, a Metropolitan Interfaith Congregations for Hope (MICAH) board member and Sudbury resident.
"People knew about the laws but still needed additional information," he said.
According to the new regulations, immigrants who are legal residents can apply for several programs such as Commonwealth Care, the subsidized health insurance program offered through the Commonwealth Health Insurance Connector Authority, and MassHealth Standard, the state's Medicaid program. They can also apply for Commonwealth Choice, the unsubsidized program offered though the Health Connector.
But illegal immigrants are in a bind, said advocates.
"Undocumented immigrants are stuck between a rock and a hard place," said Carly Burton, policy director at the Massachusetts Immigrant Refugee Advocacy Coalition. "They work multiple jobs, pay taxes, are not offered health insurance by their employers or by the new laws, and yet are subject to the mandate."
Still, the new laws may help more immigrants, legal and illegal, be insured, said advocates. Commonwealth Care has provided insurance to legal immigrants, who would not have had access otherwise, said Burton.
"It's making Massachusetts more healthy," she said. "But I wish there was another program that could provide insurance for undocumented immigrants."
Abreu shares the sentiment.
"The new law has a great intention of providing medical care to everyone, but it has limitations," she said.
Under the new laws, illegal immigrants can still apply for MassHealth Limited, which covers emergency services only, and Health Safety Net Pool, which is available for low-income individuals.
The new law would not affect all illegal immigrants. Those who don't file taxes won't be penalized if they don't have health insurance, but according to immigrant advocates, most illegal immigrants file income tax returns. Opponents said even if they pay taxes, illegal immigrants overuse health care services placing a burden on the public and are strongly against providing any health coverage for those who have no permission to stay in the country.
Advocates said many illegal immigrants avoid hospitals and only use them in emergency situations due to language and cultural barriers, lack of information and fear of leaving a trail that could be tracked down by immigration authorities. Illegal immigrants fear deportation the most.
Such is the case of Ribeiro, who during his six years here, never saw a doctor for fear of being deported. Only in 2002, he had to go the emergency room because he felt sick and couldn't work. He had pneumonia. Ribeiro knows many people who have never set foot in a doctor's office or an emergency room.
"Many people prefer to be sick than going to the hospital," he said. "But now I'm telling people they can apply for insurance."
An illegal immigrant, the man couldn't do much. Though the mandate applies to everyone, including undocumented immigrants, the new law doesn't offer health insurance programs for them, other than Free Care or MassHealth Limited, for emergency services only.
The man, who identified himself by his first name's initial and last name, A. Ribeiro, thought about continuing going without insurance, but changed his mind when he learned all those uninsured by the end of 2007 could lose their personal income tax exemption for 2007, about $219. The penalty will increase in 2008.
Ribeiro, who pays taxes with an Individual Taxpayer Identification Number (ITIN) in hopes that would help him legalize his situation, signed for both Mass Health Limited and Health Safety Net Pool for low-income people, formerly known as Free Care, for himself, his wife and their three children of ages 23, 17, and 3.
"I'm much more relieved," said Ribeiro of Medford. "I take care of myself so I don't get sick, but it's better to have insurance in case something happens."
Ribeiro signed for insurance at one of four workshops sponsored by a local Brazilian civic association that brought a researcher from Boston University's School of Public Health, Dr. Milagros Abreu, to Framingham. Abreu, who has conducted similar programs for Latinos in East Boston, came on a volunteer basis, hoping she could find funding to continue the program.
The interest has been huge, said Ilma Paixao, a member of Framingham's Brazilian American Association, which spearheaded the workshops with Abreu, because "the need is so great," Paixao said.
Since the workshops began in October, Arlete Falkowski, a volunteer with the association, has taken dozens of calls from people who want to know how the health care reform would affect them.
"People know there is a deadline and a penalty," she said. "But they don't know where to apply, if they qualify or what options are out there."
In a meeting at a Brazilian church in early December, 80 people gathered to listen to Abreu, who explained in Spanish the changes brought by the new laws. A volunteer translated into Portuguese. More than 300 have attended the workshops, and about 150 have applied for health insurance, with help of Abreu's initiative, called the Latino Health Insurance Program. Among those newly insured were legal residents who didn't know they could qualify, families with children born here who were eligible for services, and some illegal immigrants who have gone uninsured for many years.
"Some have never seen a doctor in 15 or 20 years, others travel abroad to seek medical care, and some others seek care at the last minute at the emergency room," said Abreu, who works at BU's Department of Epidemiology. "Our main goal is to make sure they have access to health care where they live. We want to keep our communities healthy. It's for the benefit of everyone."
The new health care reform became law in April 2006, and state officials said it's already achieving its goal of reducing the number of uninsured people in Massachusetts. Lt. Gov Tim Murray announced last week more than 300,000 have enrolled in health insurance programs and said, "health care reform is working." According to a 2006 state survey, there were 372,000 uninsured residents, or 5 percent of the population.
How many of those were illegal immigrants, nobody knows. Confusion about the new laws is still widespread among the immigrant community. To help them, an interfaith group visited two Latino churches in Framingham, St. Tarcisius, which offers masses in Portuguese for the Brazilian community, and St. Stephen's, which offers masses in Spanish for the Hispanic population. The sessions held in September and October were well attended, said Les Holtzblatt, a Metropolitan Interfaith Congregations for Hope (MICAH) board member and Sudbury resident.
"People knew about the laws but still needed additional information," he said.
According to the new regulations, immigrants who are legal residents can apply for several programs such as Commonwealth Care, the subsidized health insurance program offered through the Commonwealth Health Insurance Connector Authority, and MassHealth Standard, the state's Medicaid program. They can also apply for Commonwealth Choice, the unsubsidized program offered though the Health Connector.
But illegal immigrants are in a bind, said advocates.
"Undocumented immigrants are stuck between a rock and a hard place," said Carly Burton, policy director at the Massachusetts Immigrant Refugee Advocacy Coalition. "They work multiple jobs, pay taxes, are not offered health insurance by their employers or by the new laws, and yet are subject to the mandate."
Still, the new laws may help more immigrants, legal and illegal, be insured, said advocates. Commonwealth Care has provided insurance to legal immigrants, who would not have had access otherwise, said Burton.
"It's making Massachusetts more healthy," she said. "But I wish there was another program that could provide insurance for undocumented immigrants."
Abreu shares the sentiment.
"The new law has a great intention of providing medical care to everyone, but it has limitations," she said.
Under the new laws, illegal immigrants can still apply for MassHealth Limited, which covers emergency services only, and Health Safety Net Pool, which is available for low-income individuals.
The new law would not affect all illegal immigrants. Those who don't file taxes won't be penalized if they don't have health insurance, but according to immigrant advocates, most illegal immigrants file income tax returns. Opponents said even if they pay taxes, illegal immigrants overuse health care services placing a burden on the public and are strongly against providing any health coverage for those who have no permission to stay in the country.
Advocates said many illegal immigrants avoid hospitals and only use them in emergency situations due to language and cultural barriers, lack of information and fear of leaving a trail that could be tracked down by immigration authorities. Illegal immigrants fear deportation the most.
Such is the case of Ribeiro, who during his six years here, never saw a doctor for fear of being deported. Only in 2002, he had to go the emergency room because he felt sick and couldn't work. He had pneumonia. Ribeiro knows many people who have never set foot in a doctor's office or an emergency room.
"Many people prefer to be sick than going to the hospital," he said. "But now I'm telling people they can apply for insurance."
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