Business stakeholders wary of reinsurance bill

Patient giving blood
Members from the business community say they are concerned SB 6062 would add additional regulatory burdens without many benefits for business owners. Photo: National Cancer Institute

Business representatives are voicing concerns that a new bill related to health care reinsurance would mean yet another cost burden on small businesses and employers. State lawmakers agree there is work to be done, but elected to pass the bill anyway.

SB 6062 would establish the individual health insurance market claims-based reinsurance program. Prime sponsor is State Sen. Annette Cleveland (D-49), and cosponsors include State Sens. David Frockt (D-46), Christine Rolfes (D-23) and Karen Keiser (D-33).

Patrick Connor, Washington State Director for the National Federation of Independent Business (NFIB), said he had a number of concerns with the legislation.

“Effectively what we are being asked is for policy holders to pony up yet another $200 million to establish a reinsurance program,” he told panel members. “We hope that the federal government…will somehow magically give us $50 million to help offset the cost for the reinsurance program. If not, that’s okay, we will pass that back onto the policy holders again.”

“What do we get in exchange? Nothing,” he continued. “We get no guarantee that we will be fully covered in every county, there is no guarantee that health insurance costs will go down. The only guarantee is higher costs on the very people that this legislation claims to help.”

Connor added that policy holders are already suffering a 35 percent average rate increase over the last year and are subsidizing 75 percent of the high-risk pool.

Tom Kwieciak, Lobbyist for the Building Industry Association of Washington (BIAW), told the Senate Health and Long-Term Care Committee that while the association is not opposed to the concept of reinsurance, it is concerned about who would ultimately pay for its implementation. BIAW offers association health plans for its members, and some buy into the individual market.

“We are concerned going forward that, here we go again, (there is) another assessment on small businesses and individuals,” he told lawmakers. “We would prefer a broader-based assessment” that doesn’t place a tax on Washingtonians benefiting from business health insurance programs.

Under the bill, the Washington Vaccine Association would run the reinsurance program with a focus on stabilizing rates and premiums for individual health plans. The newly created Reinsurance Program Board must prepare and adopt a reinsurance plan that includes methods for calculating assessments and procedures for collecting and submitting data for quarterly reports. The plan must then be approved by the Insurance Commissioner.

Each year, the board must also determine the amount of assessments needed to generate $200 million in benefits for the next year.

Kwieciak said BIAW members covered under the association and individual market health plans have paid a large share of the Washington State Health Insurance Pool (WSHIP) assessments over the years.  WSHIP is the high-risk pool for Washingtonians which provides coverage for those unable to obtain comprehensive health coverage or Medicare supplemental coverage.

Self-insured businesses have not paid a penny into the WSHIP fund, he added, and state employees pay approximately one-tenth of what others pay. Only large or financially successful business can opt into self-insuring.

Kwieciak added that businesses were told WSHIP would go away and they wouldn’t have to pay anymore with the implementation of the Affordable Care Act (ACA), and yet the cost burden has not gone away.

“We want to make sure we don’t get taxed at the carrier level and then again at the TPA (Third Party Administrator) level because we are fully insured …we don’t want to get double hit on that if you choose to move forward with this model,” he said.

During a January 23 executive session on the bill, Sen. Cleveland said her bill is important for preparing for the future.

“Given that our state previously has experienced a market collapse in the 1990s, I think that we all understand how critical it is for us to take steps now to prevent a collapse. I recognize the bill is a work in progress and there are concerns, and I ask that we advance the bill forward today so that we can continue (our) work.”

State Sen. Ann Rivers (R-18), however, indicated the need for more discussion on the bill. “There is a lot of concern on this side and recognition of the need to do something about this issue, but we are not quite sure that this vehicle gets us there,” she told colleagues.

She added that she hopes the legislature can address the reinsurance issue and clarified that even though her party would be voting against the bill, it “does not signal an unwillingness to work on this issue.”

Both State Sens. Steve Conway (D-29) and Patty Kuderer (D-48) indicated they had concerns with the bill but voted for the bill’s passage to keep it moving forward for additional discussion. Conway said he thought WSHIP should be the lead agency of the new program as written in the previous version of the bill, instead of giving the power to “a group not familiar with insurance.”

The bill passed out of committee and was referred to Ways and Means. The bill is scheduled executive session on January 25.

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