The ranking member of the Washington State House Health Care Committee, Representative Joe Schmick, read my recent association health plan (AHP) post and shared the Insurance Commissioner’s letter explaining the agency’s recent actions.

In his letter, the Commissioner addresses the administrative law judge’s decision disapproving the agency’s rating requirements. Disagreement over bona fide status was the sole remaining issue in the Commissioner’s legal dispute with BHT following the judge’s decision.

While the Commissioner suggests information supplied by the Business Health Trust (BHT) associations led the Commissioner to abandon his dispute over the “bona fide” status of these associations; the Commissioner does not identify any new information. One possible explanation for the Commissioner’s decision may be the Department of Labor’s current audit of BHT trusts.

I would note that counsel for Business Health Trust (BHT), one of the groups of associations involved in the AHP litigation, indicated that the U.S. Department of Labor (DOL) has initiated an audit of the trusts created under the umbrella of BHT. We will of course abide by any determination made by DOL.

There would be no point in continuing to litigate the bona fide status of an association being audited by DOL; since, presumably the audit would resolve the issue given the DOL’s primary jurisdiction over the matter.

The Commissioner also notes that the long legal dispute did not cost employers their health insurance coverage.

I think it is also important to note that, because we recognized that the legal issues involved in these cases were complex, we undertook a process that allowed AHP enrollees to keep their plans during the legal proceedings. No one lost health coverage during this review process and the recent settlement will not change that fact. Similarly, there were no penalties assessed against any of the plan issuers. We took an approach that would allow a legal determination to be made with as little impact to consumers as possible during the pendency of the cases.

The Commissioner  expresses his unhappiness with the loss and challenges associations to demonstrate that their plans are not unfairly discriminatory.

My concern is only following the law and protecting consumers. There appears to be an adverse
selection impact on small employers. This is not healthy. If AHPs believe otherwise, I encourage
them to answer our questions regarding their rating. To date, most associations have refused.
If they are not unfairly discriminating among their members, then the OIC has no problems.

Now we’ll wait to see if the DOL has a problem with BHT’s bona fide status. If the BHT business model passes DOL scrutiny, expect to see more association health plans next year.

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