Comment: While Congress stumbles, state has a health care fix

By Brendan Williams

Enormous proposed 2018 increases for health insurance premiums are causing a great deal of partisan finger-pointing. Yet beset consumers care little about who scores political points off their suffering.

The truth is there is plenty of blame to go around. First, let’s focus on the positive. Medicaid expansion has brought real relief to hundreds of thousands of Washingtonians who have some access to health care, even if inadequate state rates deter many providers. This has been particularly helpful to hospitals otherwise forced to bear the costs of charity care. It has also been a net-positive for the state budget.

But as to the individual market, the Affordable Care Act was compromised from its inception. It made rosy assumptions about insurance markets that were, and remain, state-regulated. The individual market remains a discretionary one for insurers, where they hold all the power — individuals cannot negotiate prices as do large groups. In most states regulators lack the power, or the will, to keep premium increases in check.

Last year’s Washington premium increases averaging 13.5 percent were excused as “one-time” with the certainty of Nostradamus, but the ACA has no real cost controls. Federal implementation of the ACA, favoring insurers at every turn, was overseen by an Obama administration official who then left to run America’s Health Insurance Plans, a trade association. And enough healthy younger people to smooth risk have never embraced the ACA, as their premiums are higher than pre-ACA, and penalties for not enrolling are light.

The X factor now is the degree to which the Trump administration’s active sabotage of the ACA, with congressional efforts to repeal it also ongoing, exacerbate a crisis that would already exist.

Just as Republicans have never proposed an alternative to the ACA that would actually work and provide as much coverage, Democrats, while paying lip service to the overt need for ACA improvement, have never identified even a single substantive thing they would actually change. It’s a political stand-off in which consumers are the losers.

Regardless of what happens at the federal level, there is state change that might help. For years, nonprofit insurers in Washington have amassed huge piles of surplus cash, beyond what prudence — and regulation — would require. Insurers are required to maintain a level of reserves, based upon their size, to cover contingencies. For-profit companies wouldn’t sit on too much more as shareholders would expect dividends. But some nonprofits, facing no such pressure, never admit enough is enough.

As of its last financial report, for example, Premera Blue Cross, seeking a 27.7 percent rate increase for next year (21.6 percent for wholly owned subsidiary Lifewise), had more than $2 billion in total investments. That was more than $150 million more than the prior year. Washington’s insurance commissioner should account for such plentitude in the rate-review process, as Oregon’s already does.

The Legislature rejected a prior effort to expressly give the insurance commissioner this authority. Why? Hundreds of thousands of dollars in health insurer campaign contributions spread across both parties. As a result, legislators have even rejected efforts to require coverage of kids’ hearing aids. Yet the commissioner could arguably assert this authority, as nothing in current law expressly precludes it.

This would not be a silver bullet. Insurers cannot operate at a loss. The ACA’s myriad flaws, especially its disincentives for healthy enrollees — plus the costs of federal sabotage and uncertainty — are legitimate reasons for premium increases. But aggressive state regulation might make for a softer landing. Insurers would go to court to challenge rate-review that factors in their surpluses, with an uncertain outcome, but more aggressive regulation would certainly be a winner in the court of public opinion — and shame legislators into action, if necessary.

Brendan Williams is an attorney, former Washington state representative (2005-10), and health care writer working in New Hampshire.