Compared with the recent U.S. Supreme Court ruling that affirmed the national insurance exchange for the federal Affordable Care Act, a decision earlier this month by a Washington state administrative law judge regarding employee health insurance affects far fewer people. But the decision is no less significant for those people or the small businesses that employ them.
The case involved the health insurance polices for about 60,000 employees, spouses and children for some 2,500 small companies that provide insurance for employees through what are called Qualified Association Health Plans. Locally, the plans provide insurance coverage for businesses affiliated with the Master Builders Association of King and Snohomish Counties and the Northwest Marine Trade Association. The association health plans allow small businesses to obtain more affordable coverage for employees than would usually be available on their own.
The judge, who reviews cases for the state Office of the Insurance Commissioner, determined the state agency was wrong to deny the rates for several of these plans. Earlier, Insurance Commissioner Mike Kreidler had disallowed the 2014 rate schedules for many of these plans, determining that the plans were charging different rates for employees among the plans’ employers, “cherry-picking” employers with younger, healthier workers and forcing employers with older workers with more potential health problems into the higher-premium coverage market.
If they were cherry-picking, said Jonathan Hensley of Capital Benefit Services, which manages the health plans for the Master Builders and Northwest Marine Trade, among others, they were doing it blind-folded, “standing backward on the ladder and reaching over our shoulder.”
Hensley said it wouldn’t have been practical or legal to discriminate and charge different rates based on individual employees and assumptions on the cost of their coverage. And the plans’ high renewal rate among businesses also supports their contention that the rates are fair. Different rates among separate employers were based on individual businesses.
The law judge agreed, ruling that there were no state or federal regulations that supported the state agency’s denial of the rates.
Kreidler, in a Seattle Times story, said that while he disagreed with the ruling he would abide by it. The association health plans for 2014 will be reviewed again for approval, based on the judge’s ruling. At the same time, the plans for 2015, approval of which had been on hold during the court case, also are expected to be reviewed. And plans for 2016 will be submitted for approval later this year.
During the lawsuit no employees went without health care coverage, but some employers uncertain about the outcome did seek out coverage elsewhere, Hensley said.
We can’t fault Kreidler for taking a position he believed was in the interest of employees who might have been disseminated against, but we agree with the judge who recommended a legislative remedy if Kreidler sees a problem.
The decision removes a lot of uncertainty for the small businesses and their employees who depend on the association health plans.
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