Business associations joust with Insurance Commissioner over member health plans

Because more small businesses get their insurance coverage through business associations in Washington than perhaps any other state, new eligibility standards for such groups because of the Affordable Care Act could cause major coverage disruptions.

At issue is the eventual determination by the U.S. Department of Labor next year on which of the so-called Association Health Plans (AHPs) meet federal requirements or must change, possibly dramatically, to be in compliance with ERISA, which protects the interests of participants in employee benefit plans.

The issue looms far larger for small businesses in this state than others because Washington law has recognized associations formed for the purpose of providing insurance, and treated them as "large" groups, providing better healthcare packages for member businesses. State law specifically states that small groups purchasing through associations are not small groups and are exempted from the small group community rating laws, which bring higher insurance costs.

The disruption he warns about would be that since AHPs represent a major portion of Washington's health insurance market, dramatic change could affect the vehicle by which thousands of small businesses obtain insurance coverage for their employees.

And because, as with many provisions of the national health care law, there's more uncertainty than certainly about the provisions, associations aren't sure what lies ahead. But they're pretty sure their futures won't be enhanced by the involvement of the State Insurance Commissioner.

And it's an issue that has only now begun to gain visibility as business associations like chambers of commerce and the Association of Washington Business, in essence the state's chamber of commerce, grapple with a decision by the Office of Insurance Commissioner (OIC) to get involved.

And the visibility ramped up a notch this week when a bill was filed in the State Senate that would basically say "leave the association health plans as they are."

The legislative bill would declare that "association health care plans meeting certain standards should be continued as a means of providing health care as the Affordable Care Act is implemented," with standards spelled out that would basically keep most associations in place.

Trade organizations, such as the Master Builders Association whose members are all involved in the home building industry in some manner, are not composed of so many and varied business types. In fact, the Master Builders recently gained OIC approval, with some changes in the members they admit.

Executives of the associations openly sing the praises of the benefits their plans bring to the healthcare costs of small businesses. As with Debra brown, President of Forterra Inc., the benefit services subsidiary of Association of Washington Business (AWB), who notes a recent national survey foundWashington is the second most affordable state in the nation for the very smallest firms, those with fewer than 10 employees.

"Washington ranks fifth most affordable in the nation for all small firms," says Brown, who.estimates that about 500,000 employees obtain their insurance coverage through association plans "The plans represent an important and valuable asset to a lot of employees."

But the association executives are understandably reluctant to openly attack the OIC involvement in the futures of their plans.

But not so others outside association ranks, like Free, or John Conniff, a Tacoma attorney and former deputy Washington state insurance commissioner, who says: "if an organization says 'we think we comply' and they're willing to undergo the ERISA evaluation, why should they have to convince the insurance commissioner?"

"We can't not say anything," says Carol Sureau, the OIC's deputy commissioner in charge of legal affairs. "We have to get the system ready for 2014 and we have been meeting with carriers and some associations trying to see whether they can qualify as 'an employer' under ERISA."

"While this determination belongs to DOL, we know that all our associations will not be able to obtain that agency's determination until after January 1, 1914, and we must move forward as the filings must be approved or disapproved by July 31," Sureau said.

Bill Baldwin, one of the more respected insurance executives in the state and now a principal with The Partners Group in Bellevue who is on operating committee of the Washington Health Benefits Exchange, suggests that "few" of the association plans meet the requirement of being ERISA compliant. "It's hard for an association to get approval because they represent so many kinds of businesses."

But he adds that "associations is all that has saved the healthcare market in this state," emphasizing the comment was his personal view and not his view as a member of the exchange board. "They should change the law to accept association plans."

AWB President Don Brunell admits that while there is still work to be done on affordability "we believe that without association plans, health care costs for employers in Washington state would be significantly higher. It's important that association plans continue to operate as they do today, or significant disruption and destabilization will occur."