Two bills in the state Legislature aimed at increasing transparency for consumers and helping them make savvy decisions about insurance are now missing key elements, primarily because of concerns that
companies’ proprietary information might be revealed.
One bill was designed to protect consumers from being blindsided by their insurer’s potential collapse because of financial instability of their larger holding company. The other would have created a database that would give consumers health-care price and quality information.
In both cases, Premera Blue Cross, the state’s largest insurer, lobbied against the bills’ transparency provisions. “Premera supports transparency and is already implementing it for our members, employers and providers,” said Eric Earling, Premera spokesman. But the company objected to the “wisdom and value” of specific features in the bills, he said.
In one case, the insurer’s objections concerned House Bill 2461, the so-called Holding Company Act, which was requested by Insurance Commissioner Mike Kreidler to align Washington with model legislation developed by the National Association of Insurance Commissioners.
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The legislation, Kreidler’s office says, aims to protect consumers from insurers’ “Ponzi schemes” and risky financial activities, such as those that brought down AIG [American International Group], whose collapse inflicted widespread collateral damage. He said the model bill has been adopted by 25 other states.
The specific provisions at issue, Kreidler says, would have allowed his office not only to review financial information involving an insurer’s holding company, but to warn consumers of impending bankruptcy and other financial crises.
In a sharply worded statement Thursday, Kreidler’s office said Premera’s proposals to amend the bill would “gut insurance protection against financial schemes” and hide potential bankruptcies from the public.
Premera’s Earling said his company was surprised by Kreidler’s reaction, “since we support the bill and its goal of transparency.” He said Premera has been working with Kreidler’s office and lawmakers on “technical amendments” to the bill.
While protecting consumers and ensuring the financial solvency of plans is important, Earling said, the original bill would strip existing protections that protect companies’ “proprietary and sensitive information” from being released.
“What we proposed — and continue to discuss with legislators and the OIC [Office of the Insurance Commissioner — are amendments to ensure the ability to protect proprietary information, similar to what exists today,” Earling said.
Kreidler spokeswoman Stephanie Marquis conceded that early disclosures of a company’s financial precariousness “could potentially jeopardize the company, but ultimately our job is to look out for the consumer, while attempting to rehabilitate the insurer to the best of our abilities.”
Early notification could allow consumers to switch to companies that had the ability to pay claims, she said.
“If the parent company or holding company has done something that seriously damages the insurer, we want the consumers to know as soon as possible,” she said. “The question is: What doesn’t Premera want people to see?”
The bill is in the Senate Rules Committee.
The second area in contention concerns House Bill 2572, requested by Gov. Jay Inslee, which would require insurers to report what they actually paid for health-care claims. Now payments for the same procedure can vary by many orders of magnitude.
The information, compiled with quality information, would help patients and companies make health-care purchasing decisions, proponents say.
But Premera objected to its key feature — the “all-payer claims database.”
First, Earling argues, such an approach presents a number of privacy concerns for consumers, since personal medical-claim information would be stored in a state government database. And because the information is not personalized, consumers wouldn’t know their true out-of-pocket costs to make shopping decisions.
Such a database would be complex, time consuming, and expensive, both for the state and for health plans, and wouldn’t be able to deliver on its promise of transparency, he said.
Other insurers, including Regence, earlier raised concerns, and rewrites have satisfied all but Premera.
Sen. Randi Becker, R-Eatonville, Pierce County, contrary to some reports, said she wasn’t doing Premera’s bidding when she stripped the database from the bill last week and sent it to the Senate Ways and Means Committee.
“I have my own mind,” she said. “This bill was government telling our citizens what to do, not the citizens telling government what to do.”
In addition, the database focused on reimbursements, which are not “costs,” she noted. “If we’re going to reduce costs, we need to get to the cost part of it.”
Finally, she said she had concerns about revealing companies’ proprietary information. “Insurance companies, Microsoft, Boeing — they all have their formularies and their secrets of how they run their businesses. I think we have to respect that. This is a free enterprise nation, and I think we have to respect that, as well.”
Patrick Connor, the state director for the National Federation of Independent Business, which often aligns with Republicans and fought the Affordable Care Act, said his group supported the all-payer claims database.
Americans and most small-business owners, required under federal law to obtain health insurance, deserve to know what a given medical procedure will cost, he said.
“Sadly, if Sen. Becker and Premera have their way,” Connor said, “consumers who are now forced to buy a health-insurance policy from one of these companies will have no way to know if they are getting the best possible medical care they can afford for themselves and their family. Every one of us should be outraged by that.”
Carol M. Ostrom: firstname.lastname@example.org or 206-464-2249. On Twitter @costrom