To hear state Insurance Commissioner Mike Kreidler tell it, employees of businesses that purchase health insurance through trade groups have been getting unequal treatment.
A carpenter with one contractor might pay a lot more for health coverage than a similar employee at a second company — potentially $3,300 more per year for the same policy. Or the oldest worker could be paying up to eight times what the youngest paid for the same health plan.
Kreidler believed this was unacceptable, if not illegal under the federal Affordable Care Act. So he took steps to disqualify about a dozen trade groups’ rate proposals from 2014, saying he needed more details to verify that the premium disparities were legitimate.
But several business associations — including the Building Industry Association of Washington, which is made up of contractors, the Master Builders Association of King and Snohomish Counties, and the Northwest Marine Trade Association — pushed back. They said it was outside Kreidler’s legal reach to treat them as insurers and that they only negotiate the best rates they can for members.
Fearful that Kreidler’s regulatory push might cause insurers to stop offering this source of affordable health coverage, the three association health plans and Cambia Health Solutions filed a legal challenge.
Statewide, AHPs serve about 500,000 workers, and Kreidler’s actions affected about half of them, so this was no small issue.
Early this month, administrative law judge George Finkle, who heard the case on behalf of the Office of the Insurance Commissioner, ruled that Kreidler was wrong and that associations were right. Finkle found Kreidler’s office has authority to regulate association health plans to assure compliance with state and federal laws, but not the authority he’d claimed under the ACA.
Kreidler gave up his fight.
“We are relieved. It gives peace of mind,” said Jonathan Hensley, president and chief strategy officer for Capital Benefit Services, Inc., which serves as a broker and consultant for the AHPs that took on the OIC. “It does resolve an issue that has been outstanding for the better part of 15 years.’’
Hensley and others have said that employers were always free to go onto the open market and find alternatives if they thought rates were excessive.
The association plans have long been a part of the insurance landscape in Washington, and Kreidler’s office says Washington has an unusually large number compared with other states.
Despite dropping the legal challenge, Kreidler thinks the Legislature, Congress or even the federal Department of Health and Human Services could change the rules, allowing more oversight of AHPs.
“We were asking for information about how they set the rates. We still don’t know,” OIC spokesman Steve Valandra said. “The commissioner still has the belief that it’s not a level playing field out there. He still thinks there are rates that are not fair to everyone.”
If Kreidler really wants to know, he should try to get a rule change. Otherwise this case looks closed.