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Democrats: Health Bill Undercuts Consumer Protections

Provisions in the Senate and House health care bills that would allow insurers to sell plans across state lines would effectively wipe out strong consumer protections in 17 states, a group of 31 congressmen are warning Democratic leaders. The changes would impact more than half of the U.S. population, they said.

Representatives of states with strong consumer protections sent a letter (PDF) Tuesday to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) outlining their concerns. Spearheaded by Rep. Jackie Speier (D-Calif.) and signed mostly by other California representatives, the letter was sent on the same day President Obama defended the Senate health care bill in spite of its shortcomings.

"Whatever differences remain, there is broad consensus around reforms that will finally, number one, protect every American from the worst practices in the health insurance industry," Mr. Obama said.

The representatives who wrote to congressional leaders on Tuesday asked them to eliminate the interstate compact provision language currently in the bills, which they said "will lead to a race to the bottom in insurance regulation and severely threaten the important and often lifesaving protections the residents of our states enjoy."

"The negative impact of these provisions cannot be understated," they wrote. "They can and will eliminate access to important health services that so many Americans depend on."

Under the Senate bill rules, insurers would permitted to sell policies in multiple states while only being subject to the regulations of the state in which the policy was written or issued. The House bill has more stringent language: It would allow states to decide among themselves which regulations to use.

Still, the legislators wrote, "we believe [allowing states to enter into their own agreements] is an insufficient safeguard that leaves the needs of consumers to the mercy of insurance industry influence."

These provisions would, in effect, prompt insurers to move to states with the least stringent regulations, just as chartered banks have done, the legislators argued. California, they said, has been "highly effective in enforcing... comprehensive patient protections."

"California residents will certainly lose out if state protections are undermined," they wrote.

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