Senate and House Approve Competing Budget Proposals for 2015-2017 Biennium
Within only few hours of each other, the House and Senate separately approved competing budget plans for the 2015-2017 biennium. The House approved a $39 billion spending plan that will require $1.5 billion in increased taxes. The Senate approved a $38 billion operating budget that does not include tax hikes. The House approved its plan on Thursday, April 2, and the Senate countered with its proposal a few hours later, with action on a series of budget-related bills keeping the Senate working until nearly 4:00 a.m. on Friday morning.
Negotiations to find common ground will be difficult. Senate leaders have indicated that they won’t take the House-passed spending plan seriously until the House approves the taxes that support the spending increases. On the other hand, House leaders argue that the Senate-passed spending plan is more than $40 million short of balancing. With the 2015 Legislative Session scheduled to adjourn on April 26, efforts to find an agreement on the budget will move into high gear.
Life Insurance Industry and OIC Representatives Urge Hearing for OIC Request Legislation Modernizing Life Insurance Reserve Requirements
Although the House Business & Financial Services Committee approved a "Do Pass" recommendation for SB 5180, the bill has been referred to the House Appropriations Committee for consideration of fiscal issues. With a deadline for fiscal committee approval looming on Tuesday, April 7, industry representatives, together with the OIC are urging key members of the House Appropriations Committee to put the bill on an agenda in time for it to be approved before Tuesday’s deadline. Unfortunately, the bill was not included on a preliminary agenda for Monday’s hearing of the House Appropriations Committee.
The measure was introduced at the request of Insurance Commissioner Mike Kreidler to adopt the NAIC updates to the Standard Valuation and Standard Nonforfeiture laws, including a new approach based on principle-based reserves, and passed the Senate on March 5 on a final vote of 49- 0. At the hearing on the measure the American Council of Life Insurers, Allstate, American Family Insurance, and USAA testified in support of the bill. The OIC also spoke in favor of the bill.
The Senate-passed measure was considered by the House Business & Financial Services Committee which previously approved a "do pass" recommendation for HB 1076—the House version of SB 5180. Unfortunately, HB 1076 was killed in the House General Government & Information Technology Committee due to concerns raised by Committee Chairman Zack Hudgins (D, 11th District) stemming from his review of letters written from regulators in New York about the proposal. The bill was killed when it was not brought to a vote before the February 27 deadline for passage by Chairman Hudgins’ committee. Proponents are working hard to make sure that SB 5180 does not run into the same problems in the House Appropriations Committee that led to the demise of HB 1076 in the House General Government & Information Technology Committee earlier this session.
Senate Committee Considers House-Passed Proposal on Retirement Plans for Small Employers and Employees; House Committee Approves Revisions to Senate-Passed Measure
On Wednesday, March 25 the Senate Financial Institutions & Insurance Committee approved a "Do Pass" recommendation for a significantly revised House-passed proposal that is intended to provide greater access to 401(k) and other retirement plans for small employers and their employees. The final vote on the House floor for SHB 2109 was 64-34 before it was referred to the Senate committee for review.
Last year the ACLI and NAIFA, together with the Washington Bankers Association, securities professionals, and others strongly opposed a plan that would have put the state into direct competition with the private sector. HB 2109 is significantly different, and would make private plans available to small employers and their employees through a new portal. Various qualifying plans would be available through the portal, and producers and other professionals would be compensated for bringing clients to the portal who ultimately enroll in a plan. As a consequence of these changes, the ACLI, NAIFA, and securities professionals testified in support—noting that this support is conditioned on the plan continuing to be entirely private sector, voluntary, open to diverse retirement plan options including life insurance, and open to any licensed professional who chooses to bring a client to the portal. Key committee members, including the Prime Sponsor of the Senate bill on this same issue, confirmed that amendments clarifying these issues would be incorporated into the next version of the bill.
A similar bill (ESSB 5826) was amended and passed by the House Appropriations Committee on March 25, sending the bill to the House Rules Committee. The bill was significantly amended prior to passage, including new provisions requiring that all qualified retirement plans (including life insurance) must be available through the new market, and that the program must be voluntary for both employers and employees. The amendments also direct that licensed professionals who bring clients to the market must be compensated with routine, market-based
commissions or other compensation. It appears that the ESSB 5826 is the measure that leaders in the Senate and House are now focused on. With the changes adopted in the House Appropriations Committee, most stakeholders are now expressing support for the bill.
House Committee to Consider OIC Request Bill Adopting NAIC Revisions to Model Insurer Holding Company Act
On Monday, April 6 the House Appropriations Committee will hold a hearing to consider SB 5717—a bill that was introduced at the request of Insurance Commissioner Mike Kreidler to adopt the new NAIC revisions to the Model Insurance Holding Company Act. On Tuesday, March 17 the House Business & Financial Services Committee approved a "Do Pass" recommendation for measure, referring the bill to the House Appropriations Committee for consideration of the fiscal note related to the bill. This referral is routine, and should not pose a problem for the bill. Prior to passage, the committee held a hearing on Friday, March 13 to consider the measure. PCI, the American Council of Life Insurers, America’s Health Insurance Plans, and other industry groups testified in support of the bill, along with representatives from the Office of the Insurance Commissioner.
The bill was previously approved by the Senate on a final vote of 48-0. During the hearing on the measure PCI, together with the American Council of Life Insurers, America’s Health Insurance Plans and other industry trade associations and stakeholders testified in support of the bill. A House-passed version of the bill—HB 1065—was approved by the House on a final vote of 97-0 with one member excused. HB 1065 has been referred to the Senate Financial Institutions & Insurance Committee for consideration.
The revisions to the NAIC model Insurance Holding Company Act contained in HB 1065/SB 5717 are a standard for maintaining NAIC accreditation, and they must be enacted by the close of 2015. The bill has been discussed within an informal OIC stakeholder work group for at least two years.
House Committee Approves Senate-Passed Electronic Insurance Transactions Bill
The House Business & Financial Services Committee voted in support of a "Do Pass" recommendation for ESB 5471, sending the measure to the House Rules Committee. Prior to passage, the committee adopted an amendment to restore some language that was inadvertently omitted by the Code Reviser’s Office when the amendment for the bill was being prepared for the Senate floor. The amendment was not controversial, and all stakeholders checked off on restoring the language. Approval of the bill came on Wednesday, March 18, just one day after the bill was considered at hearing on Tuesday, March 17. ESB 5471 has already been passed by the Senate on a sweeping vote of 48-1. The Senate was able to bring the measure to a vote on the Senate floor after PCI and other insurers finalized agreement on key amendments to the model e-commerce legislation with the Independent Insurance Agents and Brokers of America and the Office of the Insurance Commissioner.
The measure is closely modeled after the Federal Uniform Electronic Transaction Act, and would specifically authorize insurers to conduct business with policyholders over the internet, subject to the consent of each policyholder. The proposal also includes a section that would allow an insurer to post generic policy forms and endorsements on a publicly-available website in lieu of mailing paper documents to policyholders, subject to the consent of each policyholder.
A companion bill in the House—HB 1329—was approved by the House Business and Financial Services Committee, but the measure killed in the House Rules Committee after the Senate took action to approve ESB 5471. It is not uncommon for a companion bill to be held after the same measure has been passed by the other House. With time running short before Wednesday’s crossover cutoff, House leaders simply decided to focus on the Senate-passed bill now that it has been referred to the House Business & Financial Services Committee. HB 1329 was left behind at Wednesday’s cutoff, allowing limited House floor time to be devoted to other measures.
When the bills were considered at hearings earlier this session, PCI and the American Council of Life Insurers, together with Progressive Insurance testified in support of the bill. Also testifying in support of the bills were the Office of the Insurance Commissioner and the Independent Insurance Agents and Brokers of Washington.
House Committee Approves Senate-Passed Bill Regarding Referral Fees, Prizes, and Gifts
On Tuesday, March 24 the House Business & Financial Services Committee approved a "Do Pass" recommendation for ESSB 5743 and unanimously passed the measure to the House Rules Committee. The bill is intended to address the amounts that can be provided as gifts (lifting the current $25 limit to $100) and prizes and fees for referrals. Negotiations have resolved all issues, and the bill appears to be headed to the House floor for consideration in the near future.
A companion bill (ESHB 1761) has been considered by the Senate Financial Institutions & Insurance Committee, but it appears that House and Senate leaders have agreed that ESSB 5743 will be the measure to move forward.
The measures were introduced in response to new rules on the issue that were adopted by the OIC during 2014. Many producer groups and insurers opposed the OIC’s rules. ESSB 5743 was approved by the Senate on a final vote of 48-1. HB 1761 was approved by the House on a final vote of 98-0. All of the major producer associations—PIA, IIABW, WAHU, and NAIFA, testified in support of the bills. The House Business & Financial Services Committee considered ESSB 5743 at a hearing on Wednesday, March 18. The Senate Financial Institutions & Insurance Committee held a hearing for ESHB 1761 on Thursday, March 19.
New Bill Introduced and Passed by the Senate Would Overaul Health Benefit Exchange Funding Structure—Tens of Millions of Dollars in Premium Taxes Would be Transferred to the General Fund to be Replaced with Costly New Assessments on Health Carriers
In a move that came as an unwelcome surprise to health plans, agents and brokers, and the business community, Senator Andy Hill (R, 45
th District) introduced SB 6089 on Tuesday, March 31. The bill was immediately scheduled for hearing before the Senate Ways and Means Committee on the
same day. The controversial measure was approved by the Ways and Means Committee on Wednesday, April 1 and pulled to the Senate floor for consideration on Thursday, April 2. The bill was passed early in the morning (just before 4:00 a.m.) on Friday after the Senate stayed in session all night to pass its budget plan. SB 6089 was approved along with a package of other bills that were deemed "necessary to implement the budget". The controversial bill was approved by the Senate on a final vote of 26-22 with one member excused.
According to information provided by the Ways and Means Committee, the bill would transfer approximately $29 million in premium taxes to the General Fund from the dedicated account that funds the Health Benefit Exchange. The lost revenue in the Exchange’s dedicated account would be made up with new assessments (probably the same amount as the lost premium tax revenue) to be imposed on health carriers.
At the hearing for the measure before the Senate Ways and Means Committee, America’s Health Insurance Plans, along with Regence, Premera, the Association of Washington Business, and others, testified in opposition to the measure, arguing that the bill would destabilize the Exchange, drive premiums higher both inside and outside of the Exchange, and unnecessarily overhaul the funding structure for the Exchange that was negotiated and approved only two years ago. Although the measure has been passed by the Senate, the initial response from House leaders has not been favorable, and it appears that the measure is in for a chilly reception. Because it was passed as part of the Senate’s budget package, however, the bill will likely remain alive for the balance of the 2015 legislative Session.
House Committee Approves Amended Measure Requested by Governor Inslee to Establish "All Payer Claims Database" Bill
On Tuesday, March 31the House Health Care & Wellness Committee approved an amended version of SB 5084—a bill that was requested by Governor Inslee to provide for adjustments to the statewide all-payer claims database that was established in 2014 regarding the reporting of data, pricing of products, and parameters for the release of information. The bill previously passed the Senate on a broad bipartisan final vote of 44-5.
In the House, a slightly different version of the bill (HB 1437) was killed when it was not brought to a vote before Friday’s crossover cutoff. It appears that House leaders simply decided that with the Senate’s passage of ESSB 5084, they would leave the House bill behind and focus on working the Senate-passed bill.
Although SB 5084 has been heavily negotiated by health plans and other stakeholders, additional revisions to the measure appear likely, and the future of the bill is becoming less clear. Although the bill has previously attracted supportive testimony from business groups, health plans, provider groups, and others, business groups have now voiced concern with the measure.
House Committee Kills Senate-Passed Bill to Prohibit the Health Benefits Exchange from Premium Aggregation
On Tuesday, March 31 the House Health Care & Wellness Committee held a hearing to consider 2SSB 5142—a measure that would prohibit the Health Benefit Exchange from aggregating or delegating the aggregation of funds that comprise the premium for an individual qualified health plan. The measure was introduced following related action by the Health Exchange Board to cease premium aggregation, but some legislators have expressed concern that the Board might revisit the issue.
On Thursday, March 5 the Senate passed 2SSB 5142 on a final vote of 48-1. When it was considered at hearings in the Senate, America’s Health Insurance Plans together with individual health carriers and business groups testified in support of the bill.
In the House, Rep. Richard DeBolt (R, 20th District) introduced HB 1628—an identical measure to SB 5142. HB 1628 was killed in the House Health Care Committee when it was not scheduled for hearing prior to the February 20 for committee approval. Although 2SSB 5142 was heard by the House Health Care & Wellness Committee, Rep. Eileen Cody (D, 34th District), the Chair of the Committee, killed the measure when she declined to bring the bill to a vote before the cutoff for committee action. The bill is dead for the balance of the 2015 Legislative Session.
Senate Committee Approves Revisions to Controversial House-Passed Bill Regarding Preauthorizations and Cost-Sharing
On Tuesday, March 31 the Senate Health Care Committee approved a revised version of ESHB 1471—a controversial measure that was approved by the House. The measure would impose controversial new requirements and restrictions regarding health plans’ activities associated with preauthorizations, cost-sharing requirements, and other practices. The Washington Chiropractic Association and physical therapists testified in support of the measure. Health plans, including Regence, Premera, Group Health, and America’s Health Insurance Plans testified in opposition, expressing concern that the bill would impair the ability of health plans to make routine utilization reviews, determinations of medical necessity, and other activities that are intended to make sure that appropriate services are being delivered. CareCore National also testified in opposition to the bill, noting that the measure would damage its ability to assist its clients manage their benefits and obtain the best value for every health care dollar spent. The health plans and CareCore expressed support for a striking amendment that was offered but defeated on the House floor. The amendment was offered by Rep. Paul Harris (R, 17th District).
Following the hearing before the Senate Health Care Committee, Senator Randi Becker (R, 2nd District) asked the stakeholders to meet with her and other members of the committee to see if agreements could be reached. While agreements were found on some uncontroversial portions of the bill, the subsections that deal with cost sharing requirements and other contentious issues remained in dispute. As a result, and at the request of the health carriers and CareCore, when the Senate Health Care Committee took action to approve the measure it did so only after striking the cost sharing provisions from the bill. The bill remains controversial, and proponents are working to see if agreement can be found on alternate language regarding cost sharing.
House Committee Approves Senate-Approved Bill to Standardize Filings in Large Group, Stand-Alone Dental, and Stand-Alone Vision Markets
The House Health Care & Wellness Committee has voted in favor of a "Do Pass" recommendation for SSB 5023—a Senate-approved measure that would standardize the filing requirements for disability insurers in the large group, standalone dental, and standalone vision markets. SB 5023 was introduced at the request of Cigna. The bill was approved without a dissenting vote, and has been referred to the House Rules Committee in preparation for consideration on the House Floor. The bill previously passed the Senate without a dissenting vote on a final tally of 48-0 with one member excused.
In the House, HB 1053 was unanimously approved (98-0) by the House on Wednesday, February 11. The measure has been referred to the Senate Health Care Committee for consideration
The bills have enjoyed the support of Cigna, the Office of the Insurance Commissioner, AHIP, and the Washington Association of Healthcare Plans, all testifying in support of the bills when they were heard. Other disability insurers and health care service contractors signed in to indicate support for the measures. The issues have been negotiated to resolution with the OIC.
Senate Committee Kills Controversial House-Approved Bill Relating to "Grace Periods" Regarding Coverage in Exchange QHP’s
The Senate Health Care Committee has killed HB 1626—a controversial House-passed measure that is intended to address the "90-day grace periods" provided under the ACA for enrollees who have enrolled in coverage, but who have not paid their premiums. The bill was killed when it was not brought to a vote before the cutoff for approval.
Under the ACA, carriers are obligated to provide a 90 day grace period for enrollees who have paid at least one month’s premium during the benefit year. Federal law requires the issuers to be responsible for the first 30 days of the grace period, and coverage is cancelled following the third month if payment is not made, with cancellation effective after the last day of the first month of the grace period. HB 1626 would allow providers to decline to provide services during the second or third month of the grace period. The Washington State Medical Association expressed appreciation for the bill. America’s Health Insurance Plans, individual health plans, and the Association of Washington Healthcare Plans, all expressed opposition, stating concern about how the bill would operate. The carriers noted that current law requires participating providers to provide services to covered enrollees, and enrollees in the second and third month of the grace period are still enrollees.
The bill was previously passed by the House on a final vote of 87-10 with one member excused. A separate effort to address the issue was undertaken with the introduction earlier in the session of SB 5340 by Senator Ann Rivers (R, 18th District) SB 5340 would require health carriers to be financially responsible for the full 90-day grace period. The Washington State Medical Association testified in support of the bill. Health plans, AWHP, and AHIP testified in opposition to the measure, noting that it is inconsistent with Federal law. They also warned that the bill would likely discourage health carriers from participating in the Exchange. SB 5340 was killed in committee when it was not scheduled for a vote before the cutoff for committee approval on Friday, February 20.
OIC Prepares Legislative Proposals
Insurance Commissioner Mike Kreidler has prepared a series of legislative proposals that he intends to submit to the 2015 Legislature. His proposals can be found on the OIC’s website at http://www.insurance.wa.gov/laws-rules/legislation-rules/legislation/. Commissioner Kreidler’s proposals include the revisions to the NAIC model Holding Company Act, the Standard Valuation and Nonforfeiture Model Act, the Own Risk Solvency Assessment Act, the Credit for Reinsurance Model Act, and a proposal that deals with long term care insurance bills addressing independent review organizations involved in disputes associated with long term care insurance claims.
Legislature Adopts Cut-Off Resolution for the Consideration of Bills
On the first day of the 2015 session the Senate adopted SCR 8400—a cut-off resolution establishing dates for the consideration of bills. The House approved the measure on Tuesday, January 20. Key dates are as follows:
February 20—the last day for committees in the House of origin to take action on bills;
February 27—the last day for Fiscal committees in the House of origin to take action on bills;
March 11—the last day for the House of origin to take action on bills;
April 1—the last day for committees in the opposite House to take action on bills;
April 7—the last day for Fiscal committees in the opposite House to take action on bills;
April 15—the last day for the opposite House to take action on bills (except exempt bills and bills passed by both Houses in different forms);
April 26—the last day of the 2015 Regular Legislative Session
Melvin N. Sorensen, Lobbyist