Hearing Thursday on transparency for health insurer rate increases

A state Senate committee will hold a hearing at 1:30 p.m. Thursday in Olympia on a couple of our key legislative requests.

The first -- and the less controversial -- is that we retain the authority to review health insurance rate hikes in the individual market (e.g. insurance you buy yourself, instead of get through an employer.) If this bill doesn't pass, our authority do review those rates on behalf of consumers will end at the end of the year -- and the feds will do it instead. This is Senate Bill 5398.

The more controversial bill -- at least among insurers -- is our proposal to make public all the information that health insurers send us when filing for a rate increase. As things stand now, much of that information is secret. Hundreds of consumers have told us that they feel they have a right to see it. And we agree.

We're arguing that consumers should have the right to see what they're paying for, and exactly what's driving the large premium hikes in recent years. Everyone's data would be released, making it a level playing field for all the companies. (The bill is SB 5120.)

We don't have to look far to see how this process would work, because Oregon is already doing it. What's more, that state's largest health insurer said it supports a transparent filing process.

Washington State Insurance Commissioner Mike Kreidler testified about the transparency proposal last week in front of a House committee. Here's an excerpt:

Seattle Times weighs in on health insurer surpluses

Speaking of our legislation involving large surpluses held by nonprofit health insurers, the Seattle Times just posted an editorial on the topic.

It recounts testimony at Thursday's hearing in a state House of Representatives committee:

The companies testified against any penalty for piling up surplus, raising the specter of earthquakes, epidemics and President Obama's health-care reform. The first two might bite into their holdings, and the third, they said, surely would. They said they need every cent they have.

"How much is enough?" asked Rep. Kevin Van De Wege, D-Sequim.

Their answer was a thing with no defined form — something about consumers needing "strong, muscular companies." Van De Wege asked his question again, and again received vapor.

Kreidler re: health insurer surpluses: "How much is enough?"

On Wednesday and Thursday, Insurance Commissioner Mike Kreidler testified in front of Senate and House committees about his proposal to limit further contributions to non-profit health insurers' already-large surpluses.

Here's an excerpt from the Senate hearing:

Non-profit health insurer surpluses: Hearings scheduled for Weds and Thurs

The state House of Representatives and state Senate are holding hearings this week on some of our key bills.

We want to:

1. Limit the rate increases of nonprofit health insurers once they build up a large cash surplus.
2. Make health insurer rate filings public, like Oregon does. Much of the data is now considered a trade secret, meaning we can't release it.
3. Renew our authority -- now set to expire at the end of this year -- to review individual health insurance rates.

The first hearing only includes the surplus bill, HB 1301/SB 5247. It's at 8 a.m. on Wednesday in Hearing Room 4 of the J.A. Cherberg Building, on the capitol campus in Olympia.

The second hearing -- which includes all three bills mentioned above -- is at 10 a.m. on Thursday in Hearing Room B of the John L. O'Brien Building, which is also on the capitol campus in Olympia.

Job opening: .NET application developer

We have a project job opening for a .NET application developer at our Tumwater office. The application period closes at 5 p.m. on Thursday.

This position will serve as a senior software developer for the agency, responsible for:

...analyzing system and business requirements, completing assigned coding and development assignments in accordance with defined project timelines and quality expectations, preparing user screen mockup and prototypes, preparing "developer" test cases and performing system testing and data verification. This position will perform this work using .NET programming skills including C#, ASP.NET, ADO.NET, MS SQL stored procedures and triggers.

The position, which is funded by a federal grant related to health care reform, is expected to last until Oct. 15, 2011.

For more, please see the full job listing.

Washington state fines six Chubb subsidiaries $534,000 for violations

Washington State Insurance Commissioner Mike Kreidler has ordered six subsidiaries of Chubb & Son to pay a $534,000 fine for repeatedly violating state insurance laws.

Federal Insurance Co, Pacific Indemnity Co, Great Northern Insurance Co, Executive Risk Indemnity, Inc.; Vigilant Insurance Company and Northwestern Pacific Indemnity Co. agreed to pay the fine. An additional $534,000 fine was suspended, as long as the companies follow an agreed-to compliance plan that, among other conditions, requires semi-annual self-audits.

In November, Kreidler called for a $534,000 fine and a nine-month suspension of the six companies’ insurance certificates, which would have barred them from writing new coverage during that time period. Under the consent order, there will be no suspension as long as the companies commit no further violations for three years.
“The companies have assured me that compliance is a top priority,” said Kreidler, “and I’m hopeful that this approach will resolve these ongoing problems.”
A key issue was the companies’ repeated failure to properly document the reasons for charging higher or lower rates on certain policies. Exams and audits dating back to 1998 found the same problems cropping up repeatedly. Since 2000, Washington state insurance officials have repeatedly fined Chubb and Chubb subsidiaries, and urged them to fix the problems.

Nonetheless, repeated examinations and a series of company self-audits ordered by Kreidler since 2007 found hundreds of violations of state law, including numerous recent ones. In some cases, more than half the sample files checked had violations.

Fines imposed by the state insurance commissioner’s office do not go to the agency. The money is deposited in the state’s general fund to pay for other state services.

(And here's the link to search disciplinary orders by Washington state's insurance department.)

Kreidler responds to health reform repeal efforts

On the eve of the first vote to repeal health reform, Commissioner Kreidler joined Gov. Chris Gregoire in a letter to the Washington delegation, touting the progress made to date and their willingness to enhance the Affordable Care Act where it falls short. They called out several new consumer protections already benefiting our family, friends and neighbors:

• Children with significant health care needs cannot be turned away by insurance plans.
  
• Young adults can stay on their parents' health plan until age 26.
  
• No more cost sharing for preventive service, including cancer screenings and immunizations.
  
• People with pre-existing conditions who've been uninsured for at least six months can get health insurance through the new federally-funded Pre-existing Condition Insurance Plan.
  
• Small businesses that offer their employees health insurance can qualify for tax credits.

In a news release issued by the Washington Public Interest Rearch Group yesterday, Kreidler said, “Putting politics aside, our current health insurance system is unsustainable. Washington families and businesses are hurting. They contact my office every day, calling for help, because they can’t find insurance or afford the coverage they have. The new reforms just starting to take effect will help, but we need the full reforms coming in 2014. Any effort to repeal health reform now is short-sighted and will only harm consumers.”

Both Kreidler and Gregoire admit in their letter to the delegation that the Affordable Care Act may not be perfect, but they make the argument that repealing it - and all of the work that has been done to date to implement the reforms - would be a giant step backwards for our state and nation.

New 2011 open-enrollment periods announced for kids

The individual health insurance market will have two special open-enrollment periods for children this year. Parents who want to add their children to their individual health plans or buy child-only plans can do so from March 15 to April 30, 2011 and from Sept. 15 to Oct. 31, 2011.

Commissioner Kreidler created the open-enrollment periods through a regulation filed today. The individual health insurance market is for people who do not have access to employer-sponsored health insurance.

New consumer protections under the federal Affordable Care Act prevent health insurers from denying coverage to children with pre-existing health conditions. However, special open-enrollment periods are allowed.

During open-enrollment times, children under age 19 cannot be denied health insurance because of a pre-existing condition. People looking for coverage for their children outside of the enrollment dates can apply either to the Washington State Health Insurance Pool (WSHIP), or if they qualify, to the new Pre-existing Condition Insurance Plan (PCIP-WA). To enroll in PCIP-WA, you must have been uninsured for at least six months and have a pre-existing medical condition.

Exceptions where parents can apply for individual coverage for their kids anytime include the birth or adoption of a child or if a child or the parent:

• Is no longer eligible for a state program.
• Loses coverage due to a divorce.
• Loses employer-sponsored coverage.
• Moves and their plan is not available where they live.

In 2014, when the full health reforms take effect, no one of any age can be denied insurance because of a pre-existing condition.

Anyone with questions about the individual health insurance market is encouraged to call our Insurance Consumer Hotline at 1-800-562-6900.

Insurers fined more than $580,000 in Washington in 2010

In 2010, we issued more than $580,000 in fines against insurers for a variety of violations, including illegal phone solicitation and overcharging customers.

The Doctor's Company, of Napa, Calif., for example, was fined $104,200 -- with $50,000 suspended -- for failing to file insurance rates with us prior to using those rates.

Metropolitan Casualty Insurance Co., of Warwick, R.I., and several related entities were fined $45,000 with $20,000 suspended after an examination found numerous problems with insurance documentation. Among the problems: $190,704 in overcharges to senior citizens. (The company also refunded the money to the affected policyholders.)

The point of the fines is to ensure that insurers follow the rules. This protects consumers and preserves a fair marketplace.

We should probably also point out that the money doesn't go to our agency. It's deposited in the state's general fund to pay for other state services. In 2009, fines totaled $407,600. A year earlier, the total was more than $1.2 million.

Here's a link to a list of our enforcement actions over the past six months.

And to search more than a decade's worth of past orders and fines -- including violations by agents and brokers -- check out this online lookup tool we built.

Job opening: Staff attorney

We're trying to fill a staff attorney position in our Tumwater office. (We're the state agency that regulates the insurance industry in Washington state.)

The person will provide legal advice to agency staff, handle enforcement matters, and participate in the drafting of legislation and regulations, among other duties. Some travel is expected for witness interviews and to work with other insurance regulators.

The application period will be open until the position is filled. For more details, including salary, benefits, and qualifications, please see the full job listing.

Why we're proposing legislation to limit the surpluses of non-profit health insurers

Among our legislative proposals this year: a bill to limit non-profit health insurers' rate hikes once the company's surplus funds grow above a certain level.

It would allow the insurers a substantial cushion of cash for unforeseen emergencies, but also help keep premiums from growing any more than absolutely necessary.

The background: Insurers, by the nature of their business, collect and invest substantial amounts of money. They need to do this, in order to pay out claims. They have to comply with solvency regulations designed to ensure that the company can make good on its promises to policyholders. If that's in doubt, we can take the company over and try to rehabilitate them so that policyholders and medical providers are protected.

But at this point, the state's three major non-profit health insurers (Regence, Premera, and Group Health) have large surpluses that have grown dramatically over the past 8 years. Together, they have more than $2 billion more than they expect to pay out in claims. At the same time -- this will come as news to no one -- health insurance rates have grown dramatically.

So we're seeking the explicit authority to consider surpluses -- and investment income -- when reviewing proposed rates.

Here's what those surpluses look like. (Capital and surplus means the balance of assets after making provisions for the payment of claims):

 

Our proposal would work like this: Once an insurer has enough to pay its expected claims plus an extra three months of average claims, we would not approve a rate that adds more to the surplus. (An exception could be granted, however, if the restriction would threaten an insurer's financial health.)

The three insurers listed above have surpluses equal to 4-5 months of claims each. They'd still have a substantial cash cushion in case of unforeseen costs, but we believe our proposal would also help keep premiums down.

The proposal would affect the lines of insurance over which we have the authority to review rates: individual and small group coverage.

The legislative session begins next week. Stay tuned.