Life Insurance Industry and OIC Representatives Urge Passage of OIC Request Legislation Modernizing Life Insurance Reserve Requirements
Although the House Appropriations Committee failed to consider and approve SB 5180 before the April 7 deadline for passage, House leaders have advised the OIC that the bill is not dead. The House Business & Financial Services Committee previously approved a "Do Pass" recommendation for SB 5180, and the bill was referred to the House Appropriations Committee for consideration of fiscal issues. With a deadline for fiscal committee approval on Tuesday, April 7, industry representatives, together with the OIC unsuccessfully urged 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 scheduled for a hearing before the committee, nor was it brought to a vote. The OIC expressed concern about this development to House leaders, and they were advised that the bill is not dead. House leaders have the option to simply "relieve the committee" of the bill and place it in the House Rules Committee or directly on the House Floor Calendar. The OIC believes that is exactly what will happen in the next day or two.
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 worked hard to make sure that SB 5180 did 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, but that’s exactly what happened. Rep. Hudgins is also a member of the House Appropriations Committee, and it’s apparent that he expressed objection to SB 5180 moving forward. The future of the bill now rests entirely with House Democrat leaders. If they pull it from the House Appropriations Committee, proponents will launch a direct effort to gather support from members on the House floor.
OIC Request Bill Adopting NAIC Revisions to Model Insurer Holding Company Act Pulled to House Floor Calendar
On Monday, April 6 the House Appropriations Committee held 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. The American Council of Life Insurers, the Property Casualty Insurers Association of America, America’s Health Insurance Plans, and other industry groups indicated support for the bill, and representatives from the Office of the Insurance Commissioner provided testimony on its importance. The bill was approved by the committee on Tuesday, April 7 and pulled to the House Floor Calendar on Thursday, April 9. The bill could come to a vote at any time.
The bill was previously approved by the Senate on a final vote of 48-0. During the hearing on the measure the ACLI, together with the Property Casualty Insurers Association of America, 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 Approves Stakeholder-Recommended Amendments and Passes Proposal on Retirement Plans for Small Employers and Employees; Senate Committee Approves Same Amendments on House-Passed Version of the Bill
On Friday, April 10 the House gave final approval for a significantly revised Senate-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 ESSB 5826 was 57-40. Prior to passage the House adopted a heavily negotiated amendment that included direct input and priorities from the securities industry, life insurers, agents and brokers, and business groups.
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. The House-passed version of ESSB 5825 is significantly different, and would make diverse qualifying 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 assured that amendments clarifying these issues were incorporated into the final version of the bill.
A similar bill (ESSB 2109) was amended and passed by the Senate Ways and Means Committee on Tuesday, April 7, sending the bill to the Senate Rules Committee. The bill was amended with the same language that was passed by the House on ESSB 5825, 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. ESSB 5826 will now go back to the Senate for a concurrence vote on the House-passed amendments. With the changes adopted on the House floor, most stakeholders are now expressing support for the bill.
House Approves Senate-Passed Electronic Insurance Transactions Bill
On Wednesday, April 8 the House passed ESB 5471 on a final vote of 97-0 with one member excused. The bill will be returned to the Senate for consideration of a House-passed 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 in the House was not controversial, and all stakeholders checked off on restoring the language.
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.
When the bill was 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 bill were representatives from the Office of the Insurance Commissioner and the Independent Insurance Agents and Brokers of Washington. It is expected that the Senate will concur in the House amendments to the bill, which will send the bill to Governor Inslee for consideration.
Bill Regarding Referral Fees, Prizes, and Gifts Pulled to House Floor Calendar
On Thursday, April 9 ESSB 5743 was pulled from the House Rules Committee and placed on the House Floor Calendar. Earlier 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 for an uncontroversial final vote on the House floor in the near future.
A companion bill (ESHB 1761) has been considered by the Senate Financial Institutions & Insurance Committee, but 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 previously 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 has considered ESSB 5743 on Wednesday, March 18. The Senate Financial Institutions & Insurance Committee held a hearing for ESHB 1761 on Thursday, March 19.
House Leaders Express Skepticism Regarding Senate-Passed Measure to 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
Key members of the House have indicated that they will not likely agree to a new bill that was introduced and passed by the Senate last week to overhaul the funding structure for the Washington Health Benefit Exchange and transfer nearly $30 million in premium tax revenue from the Exchange to the State General Fund.
In a move that came as an unwelcome surprise to health plans, agents and brokers, and the business community, Senator Andy Hill (R, 45th 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 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. Despite being referenced in the Senate budget, House Health Care Committee Chair Rep. Eileen Cody (D, 34th District) has indicated that she does not plan to provide the bill with a hearing. A broad coalition of businesses groups, health plans, agent/broker groups, and patient advocates have scheduled a series of meetings with key members of the Senate to explain their opposition to the measure.
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. The bill remains in the House Rules Committee.
Senate Committee Approves Revisions to Controversial House-Passed Bill Regarding Preauthorizations—Proponents Confirm They Will Accept Negotiated Language and Will Not Pursue Controversial Cost-Sharing Amendments
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 new requirements regarding health plans’ activities associated with preauthorizations and other practices. When the House-passed bill was considered at hearing, 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. Proponents have agreed that they will not pursue the controversial language regarding cost sharing. As a result, the negotiated bill is likely to move forward without further controversies. The bill has been placed on the Senate Floor Calendar and could be brought to a vote at any time.
House Passes Senate-Approved Bill to Standardize Filings in Large Group, Stand-Alone Dental, and Stand-Alone Vision Markets—Bill to Go to Governor Inslee
The House has given final approval to 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. The bill now goes to Governor Inslee for consideration.
SB 5023 was introduced at the request of Cigna. The bill previously passed the Senate without a dissenting vote on a final tally of 48-0 with one member excused.
The bill has 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 it was heard. Other disability insurers and health care service contractors signed in to indicate support for the measures. The bill ran without significant controversy once all issues were negotiated to resolution with the OIC.
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