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U.S. Health Insurance Regulator to Leave Oversight Job

Steve Larsen, the government administrator directing enactment of U.S. insurance regulations created by the 2010 health-care overhaul, said he is leaving to take a job with UnitedHealth Group Inc. (UNH)

Larsen will resign as head of the Center for Consumer Information and Insurance Oversight in July to become an executive vice president at UnitedHealth’s Optum unit, he said in an e-mail. Larsen worked for Amerigroup Corp. (AGP), a Virginia Beach, Virginia-based insurer specializing in Medicaid plans, before joining the Department of Health and Human Services in 2010 and had served as Maryland’s insurance commissioner.

Larsen’s departure was announced by his boss, Marilyn Tavenner, the acting administrator for the Centers for Medicare and Medicaid Services, in an e-mail to her staff today. He will be replaced temporarily by Mike Hash, an adviser to Health and Human Services Secretary Kathleen Sebelius while Tavenner searches for a permanent replacement, she said.

“I am proud of our efforts to hold insurance companies accountable to consumers and our work with states and others to build a new insurance marketplace,” Tavenner said in the e-mail to her staff.

Spending Rules

Larsen supervised new rules that limit the amount of premium revenue insurers can keep for profit and administrative costs. His agency is guiding states as they develop insurance “exchanges” authorized by the law to sell policies to people who don’t get coverage through work. The agency will install a federal exchange in states that refuse to build their own by 2014 when the exchanges are supposed to begin.

Larsen’s position made him one of the country’s most powerful regulators of the health insurance industry, said Joel Michaels, a partner at McDermott Will & Emery in Washington who represents insurance companies.

“His role was fairly prominent because the nature of the law moved so much state insurance regulation to federal regulation, at least in certain key areas,” Michaels said today in a telephone interview.

The U.S. Supreme Court is expected to rule this month on a case that argues that provisions of the law are unconstitutional. Larsen’s work may be undone, and his agency eliminated, if court throws out the law.

The Optum division of Minnetonka, Minnesota-based UnitedHealth, the largest U.S. health insurer, provides health- care services including pharmacy benefit management, consulting, and wellness and disease-management programs for employers.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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