Editorial: Bit of insurers’ reserves can support public health

By The Herald Editorial Board

The old line about an ounce of prevention being worth a pound of cure has no more appropriate application than to public health: Spending money now on prevention and preparation can save much more than would have to be spent on responding to a crisis or disease outbreak later; not to mention the potential for lives saved.

We saw that play out in Everett and Snohomish County as a prepared, coordinated and practiced response effort — that included Providence Regional Medical Center Everett, Providence’s clinic staff, the Snohomish Health District and the county’s Emergency Medical Services system — acted quickly and efficiently when a county resident, returning from a trip to Wuhan, China, reported symptoms last month consistent with the coronavirus outbreak there. (You can read more about that response and its success in The Sunday Herald on Page B6.)

The difference between what was spent to treat the patient and contain the disease and what a local outbreak of coronavirus in the county might have cost is incalculable but imaginable.

But similar responses to public health challenges, such as last year’s measles outbreak in southwest Washington state, too often have to mount efforts to prepare and respond with less than adequate funding.

For public health agencies, such as Snohomish Health District, being prepared for disease outbreaks comes on top of a range of related responsibilities for both prevention and cure. Among services Snohomish and other health agencies are expected to provide are: tracking and responding to disease in the community, including sexually transmitted disease, opioid addiction, tuberculosis and hepatitis; recording birth and death certificates; recording and keeping health statistics; inspecting restaurants and issuing food-worker cards; testing drinking water and wells; inspecting septic systems; and providing health and nutrition services to children and youth.

A recent study requested by the state Legislature found that among the state’s public health agencies there is a $296 million funding gap per biennium in state funding. For the Snohomish Health District, its revenue has dropped by 40 percent since 2006, even as the county population has increased by 14 percent.

There’s been progress to address the funding gap, including a tax adopted last year on e-cigarette products, the revenue from which goes to a state public health fund shared among health agencies in the state. But other sustainable sources of revenue are needed.

One potential new source of revenue could put to good use money that appears to be going unused by the state’s nonprofit and for-profit health insurance companies.

The three nonprofit insurers in Washington state — Premera, Regence and Kaiser Permanente — have amassed reserves that as of 2018 totaled $4.4 billion, up from $2.4 billion in 2012. That’s money that represents the difference between the premiums paid by insurance customers and the claims paid by the companies, money held even as insurance rates have increased.

The nonprofit insurers are required to keep a healthy reserve on hand, but as of 2018, according to figures from the state Office of the Insurance Commissioner, Kaiser’s was a little less than 600 percent of its required reserve, Regence’s was more than 1,300 percent, and Premera’s was above 1,500 percent of the required amount.

House Bill 2679, initially proposed by state Rep. June Robinson, D-Everett, would collect a 3 percent tax on any surplus above 600 percent of the mandated reserve. To level the playing field among insurers, a Republican proposal would levy a similar tax on for-profit companies. (The bill has yet to get a vote on the House floor, but because it pertains to the budget, it’s still alive.)

A fiscal analysis by the state Office of Financial Management assumes that the excess surplus above the 600 percent lid from the two largest nonprofits — Premera and Regence — would total about $1.9 billion each year, bringing in about $57 million a year from the tax.

That money would have two purposes. It would be used to provide health insurance subsidies for some of the estimated 477,000 state residents who do not qualify for federal health subsidies under the Affordable Care Act; and it would be shared among several public health agencies, including the state Board of Health, tribal health agencies and county-level health agencies.

The legislation has faced opposition from insurance company lobbyists, and some lawmakers have expressed concern that the tax might cause companies to drop their plans and leave the state. But that concern makes little sense when you consider what those companies have amassed in their reserve funds. Business is good in Washington state.

This fund, supported by the companies’ reserves, is in their interest because it will work to improve health throughout the state and the health of their customers, keeping their costs down.

The insurance companies have practiced this ethic in the past.

Dr. Anthony L-T Chen, director of health for the Tacoma-Pierce County Health Department, wrote in a recent commentary for The News Tribune, that health insurers were a key participant in the creation of the Washington Vaccine Association, which has guaranteed childhood vaccinations at no charge to families.

Heather Shinn Thomas, public and government affairs manager for the Snohomish Health District and president of Washington Public Health Association, agrees.

“It’s important to note that the insurance companies and carriers have been great partners with public health,” she said last week. “It’s an incentive and an advantage to partner better with the communities they serve and the communities we serve.”

Reserves can provide a needed source of cash to confront the unexpected, but judicious use of a little of those reserves can help prevent the unexpected in the first place.