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OIC Advisory Committee Notes – October, 28th, 2015

Author: Chris Free    Posted: November 2, 2015

Insurance Commissioner Mike Kreidler and Chris Free

Insurance Commissioner Mike Kreidler and Chris Free

On October 28th we convened the advisory committee at the Insurance Commissioner’s office. These meetings are always filled with interesting and important updates for the insurance industry and the residents of Washington State. It’s also a great opportunity to share the perspective of the individuals and businesses that are buying insurance every day in this market and what various regulations and reforms would mean to them directly.

The Commissioner shared information on some of the developments at the Federal level. As you hear about identity theft in the news every day, it was nice to hear the Federal Government is working on additional protections with a new Cyber Security bill. There is still some disagreement throughout the legislature and industry on how it should be crafted, but the goal is a level of uniform protections that would be available nation wide.

The Federal government continues to wrestle with the idea of Too Big to Fail (SIFIs: Systemically Important Financial Institutions) and how to apply it to the insurance industry. Our Commissioner believes that the Holding Company Act passed here in Washington State helps by better identifying insurance companies that might be held by other forms of institutions.

In a much needed effort, the Commissioner’s office will be following California’s lead on surveying the insurance market for diversity of employment and board membership. The staff asked our committee for recommendations for how to bring more diversity into this marketplace. The key idea our committee presented was to bring insurance education into schools where diverse children can be taught about the opportunities in this market, how to access those opportunities, and how to succeed.

We talked a bit about Moda pulling out of the market. At the time of the meeting, the only publicly available information was that Moda was pulling out of the individual market. We now know they are also pulling out of the group market here in Washington State. While this will mean many people have to change insurers, our market has many choices that should make this a relatively small ordeal for most people. This is clearly one of the benefits of having a strong and diverse insurance market full of consumer choice.

The Commissioner informed us that the uninsured rate was down to 9% in Washington from a high of 14% prior to the passing of the ACA. This is clearly due to the Medicaid expansion within the ACA and the strong enrollment the Exchange has seen in Medicaid. Unfortunately, this same strong enrollment is putting significant strain on the Exchange’s sustainability.

As most of the public is aware, the Exchange is removing premium aggregation systems and transitioning payment processing to the insurance companies directly. According to the Commissioner’s office, this process is going as smoothly as could be imagined. Nice to get some good news.

The Federal Government did pass the PACE ACT allowing states to set the size of their small group markets instead of forcing all states to consider groups up to 100 employees to be small groups and therefore community rated. Since the Federal Government did not set the size of small groups, and the law in Washington states that small groups are up to 50 employees, the commissioner has decided to keep the small group definition at 50 employees. While this caused some disruption with the carrier’s rating models, this should have very little impact on the insurance buying public.

The Commissioner did clarify an interesting fact. While the Washington State law says that small groups as defined as 1 to 5o employees, the Federal government defines small groups as 2 to 50 employees. Therefore, 1-life groups are not eligible for coverage in the Washington Healthplanfinder.

Association Health Plans are still a topic of discussion at the OIC. A Federal judge ruled against the OIC’s assertions that AHPs would need to be rated according to the size of the group and not the size of the association. The OIC has decided to accept that position and no longer push against AHPs for this rule. However, the staff at the Commissioner’s office did state that the DOL is looking into this ruling now. We’ll have to keep our eyes and ears open to see if they make changes to the ruling.

A new carrier to Washington has approached the Commissioner’s office to come into our market. Zoomcare is interested in selling plans in the individual Exchange in 2017 for King and Clark Counties. According to the Commissioner, they are filed to begin selling plans in the Oregon Exchange in 2016. This will allow us to see their performance in Oregon before they’re released in Washington. Everyone agreed it’s good to see more innovative models moving into our market.

The Commissioner did mention that his office is working on new legislation regarding Third Party Administrators; essentially creating a regulatory framework and transparency for the various entities doing the supplemental work for health insurance plans, including benefit managers, administration companies, etc. This should be a very interesting piece of legislation due to the blending of tasks we’re seeing firms taking on in the market.

One last item that should make things better for consumers is the Commissioner’s desire to see something done about surprise medical billings. This could be very difficult legislation or regulation depending on how the goal is achieved… but, the goal is worthwhile. The Commissioner would like to see hospital bills provided to patients as a single billing from a single entity. They receive many complaints that patients seek care and receive multiple bills from the facility, in network providers that work at the hospital, and out of network providers that may contract with this hospital. It is uncertain how this will look when it’s put on paper.

It’s always interesting to hear what coming in the future of legislation in Washington State. If you have any questions on this information, you’re welcome to reach out to me.


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