A little over halfway through his tenure as Pennsylvania’s insurance commissioner, Joel Ario feels he has a lot of work ahead of him.

Joel Ario

Ario, nominated by Gov. Ed Rendell in June 2007, said despite rumors to the contrary, he has no plans to exit his Harrisburg office in the near future. Under Pennsylvania’s existing term limits, Rendell cannot seek a third term in office in 2010, so Ario knows his time might also be limited.

“In my position, even if I wanted to continue into the next governor’s administration, that person would likely want a new insurance commissioner,” Ario told IFAwebnews.com. “So I generally think of my tenure of having a limit of December 2010.”

The commissioner said his personal to-do list for the next year-and-a-half includes expanding access to health care and seeking more equity in rates and preserving the AIG companies in the state “as strong competitors.”

Looking back

Ario said his biggest challenge was the proposed merger of Philadelphia-based Independence Blue Cross and Pittsburgh-based Highmark, withdrawn by the insurers after nearly 20 months of talks.

Following the withdrawal, Ario said he would have denied the consolidation, which would have created an entity with 51% of the state’s health insurance market, something he said he could not permit.

Both insurers voiced their disagreement with regulators on the issues of stifling competition in the state and a stipulation of any approval that they would have to forfeit the use of either the Blue Cross or Blue Shield brand in parts of the state.

With the merger in the past, both insurers told IIFAwebnews.com they look forward to working with Ario in the future. IBC, through its spokeswoman, Ruth Stoolman, said the commonwealth is “fortunate to have someone with Commissioner’s Ario’s extensive experience with and deep understanding of the distinctly different sectors within the insurance industry” with many issues affecting insurance in Pennsylvania and across the nation.

Room to improve

Sam Marshall, president and CEO of the Insurance Federation of Pennsylvania, said that the proposed merger is both the organization’s “area of agreement and opposition” with Ario. The federation represents around 200 insurer members of all types in the state.

With the state “dominated” by the two Blues plans, Marshall said, the federation believes “an essential component of health reform should be a more competitive marketplace.”

“The commissioner cited this in disapproving the merger of those two Blues – but seems to give it little weight in proposing small-group rating restrictions that we believe will further the regional dominance of those plans,” he said. “That’s a broader debate, though, as it is a legislative one.”

Don White

Mixed reaction also came from Sen. Don White (R-Indiana), chairman of the Banking and Finance Committee, who delayed Ario’s confirmation for 13 months, after his appointment in June 2007, as part of an ongoing debate among Senate Republicans and Rendell over expansion of health insurance in the state. White said he was “impressed” with Ario’s review of the matter and the commissioner “did a great service to the people of Pennsylvania by making sure the marketplace did not become even less competitive than it currently exists.”

However, White said concern remains with Ario’s proposal to implement small-group rating reform, especially the methodology the commissioner proposes.

“He is advocating an approach that runs counter to the logic he used when he decided to require Blue-on-Blue competition as a condition of the proposed merger,” the senator said. “I will not support a rating reform plan that helps dominant insurers protect their already commanding market share and will instead continue to advocate for an approach which allows small insurers to become competitive in the health insurance marketplace.”

Rick Dreyfuss, a senior fellow with the public policy Commonwealth Foundation, said the group agrees with Ario’s decision on the proposed merger as well, but finds opposition in the commissioner’s “proclivity to achieve greater levels of government subsidies as an illogical means to lower overall healthcare costs.”

“Such a move only shifts costs to others and incents further taxpayers subsidies,” said Dreyfuss, who focuses on health insurance for the foundation. “I am also opposed to his inclination to favor community rating versus medical underwriting in establishing fair actuarial premium rates.”

Joel Ario
Biography
• Former Oregon insurance commissioner (2000-2007)
• Former secretary, vice president of NAIC
• Member, board of directors and consumer participation board for National Insurance Producer Registry
• 1981 graduate of Harvard Law School
Other Milestones
• Reorganization of department to better combat fraud
• Testimony before Congress on topics, including AIG collapse, small business insurance
• Support for various health initiatives, including expansion of SCHIP program and mini-COBRA

A shorter version of this story originally appeared in the July 2009 print edition of Insurance & Financial Advisor.