Let me start by noting without doubt that my Irish roots were proven once again in my recent attempt at a short vacation. I do indeed have the “luck of the Irish” that proves my green blood.
My wife surprised me with a one week castle tour of Ireland to celebrate both my birthday and St. Patrick’s day (Conniff / Connacht province). The day I left, the Washington State Senate passed Substitute Senate Bill 5605 by a wide margin of 38 in favor 11 against. I was surprised and my clients were happy that the Senate did not fall for the old “fiscal note” trick that warns of speculative financial ruin when an agency opposes a bill.
As you know, the legislation described on this site before would prohibit the Insurance Commissioner from deciding for himself whether an association satisfies the federal ERISA standards for treatment as a single, large group plan. More importantly, the legislation would require federal agencies to do their own work and prevent a situation where the Commissioner’s standards don’t match the federal standards leaving an association legally exposed to beneficiary lawsuits. Seems simple enough. Here’s the bill’s main provision:
“Until or unless the United States department of labor prohibits the treatment of a health plan issued to an association or member-governed group as a large group plan, any rate or form filed by any life and disability carrier for health benefit coverage to employers purchasing health plans through that association and member-governed group shall be deemed and may only be reviewed as a negotiated large group filing by the insurance commissioner.” [Sections 2(3), 3(3), and 4(3)]
For those not understanding the irony of the phrase “luck of the Irish,” passage of the bill would not be good news nor would my vacation.
On my second day in Dublin, I got sick and I stayed sick throughout the week. However, being sick is a good excuse for avoiding tours and shopping and sitting instead in a pub with a pint. I also had the opportunity to experience Ireland’s hybrid public health care system which guarantees basic services with private health insurance for other care. A local village nurse prescribed some medicine which I took to a village chemist who gave me a cup of hot tea while waiting for the cure. Not so bad – 30 Euro for the visit and 11 Euro for the medicine.
The next morning, alive with new hope, I opened the Irish Independent and read this, “Pledge of universal health care appears to have vanished.” There were many articles discussing the problems in the Irish health care system that week. For the rest of my trip, my wife had to hand me newspapers with big holes cut out so I would actually “vacation.” Before she was able to find scissors, I was surprised to find how utterly common the problem of financing health care has become. According to the Independent:
“Last year, 64,000 subscribers dropped their health insurance. After further steep increases, the number of parents and their children who could leave in the near future has been put at tens of thousands. At peak, private health insurance covered 51pc of the Irish population, an extraordinarily high proportion. Much of this was due to the shortcomings of the public system. But over the past few years the cost of private insurance has risen so steeply that more and more consider it simply unaffordable and have returned to relying on public provision.”
“The flow may increase shortly, when a levy of €350 (€120 for children) will be imposed to support the “community rating” system. This is the device which saves people from paying more when older or more frail.”
“One of the greatest concerns of health professionals is that it is chiefly younger and healthier people who are leaving the private system. In addition, people are cutting down on treatment or delaying it. That must mean, in some cases, long-term problems.”
I stopped reading. The problem is too familiar. It’s one of the reasons small employers are holding onto their current association coverage so tightly. I felt comfort in knowing that Washington State was on the right track. The comfort was too brief. Within days of leaving America, my phone began dinging like a mad hatter and AT&T began charging me a dollar a minute.
The Insurance Commissioner’s new old friend, CMS Oversight Division acting director, Teresa Miller, also the former Oregon Insurance Commissioner, discovered the “Washington problem.” Miller kindly provided a letter to Commissioner Kreidler expressing her view that the association plan bill that had just passed the Senate would be “preempted by federal law.” What good luck and timing for Commissioner Kreidler.
CMS summarized the legislation as “intended to exempt the association coverage at issue from the [small group insurance reforms under federal law].” Of course, the bill doesn’t actually provide for such an exemption; CMS prefers to focus on the intent. That’s what people hope no matter what the bill actually says.
Ms. Miller goes on to note that if the bills were “determined to have this effect, they would conflict with the manner in which coverage is classified under the PHS Act the Employee Retirement Income Security Act (ERISA), and guidance issued by the Centers for Medicare & Medicaid Services (CMS) addressing association coverage.” What a calamity! But, the bill does not actually say this. It’s a risk only if someone, (other than CMS I suppose), determines that the bill has “this effect.”
Let’s look at that again (roll tape). The Senate bill is preempted but only if someone decides the bill does what Ms. Miller thinks it might do, if it does it at all. Here are two other sentences with the same obvious statements that could be said of any legislation currently before the state Legislature:
“…to the extent that the legislation (if enacted and implemented by State as intended) would prevent the application of federal law requirements for coverage offered to small employers through an association…”
“[The bill] would be preempted by the PHS Act and ERISA to the extent that it prevents the application of federal law by preventing the application of PHS Act and ERISA requirements in the absence of an affirmative action by the Department of Labor that is not required or contemplated by the PHS Act or ERISA.”
Let’s just skip over the obvious “if” repetition about the bill doing the things imagined and look at the what happens if god forbid, the state legislation were preempted. This sounds almost as bad as the consequences described in the Commissioner’s fiscal note.
“Should the State either inform us that it would not be enforcing federal law with respect to the coverage at issue, or subsequently fail to do so, this could give rise to CMS directly enforcing applicable federal requirements for health insurance coverage offered through an association.”
Ummm…I thought that was the purpose of the bill – federal agencies applying federal law that could be relied upon by employers rather than local interpretations of federal intentions applying federal standards without any legal protection that comes when a state agency without authority tells an employer that everything will be just fine.
Let’s look at what the Commissioner has already said about enforcing federal law in a presentation to insurers last fall.
– Firmly sets forth the position that Association Health Plans are subject to Federal Health Care Reform
– Sets forth a process for filing of rates with CCIIO if the state is deemed to not be an effective rate review state for Association Health Plan Business (Washington is not and (sic) effective rate review state for AHP business)
– Clarifies that small employers and individuals purchasing coverage through AHPs that are not an employer under ERISA are considered to be small group and individual market products for FEDERAL rate review purposes” [at 4]
“Employer Health and Welfare Benefit Plans must satisfy criteria to bring them within the ERISA definition of “employer.” The U.S. Department of Labor (DOL) will make the ultimate decision as to status of the association as employer under ERISA.” [at 7]
Let’s compare. Ms. Miller says that if the state tells CMS that it cannot properly regulate association plan rates, it will and that federal agencies are not required to make a determination of an association’s status under ERISA. Commissioner Kreidler says the state is not an effective rate review state for AHP business and that the Department of Labor will make the ultimate decision as to status of an association under ERISA.
Here’s some reality therapy. The bill is just fine. It defers to federal law, tells the Commissioner not to pretend to be a federal agency and follows the current state law exemption of association plan rates from the state community rating law. [I don’t know if the Commissioner asked for a letter declaring the old state law preempted as well.] DOL has already said many times, that it is the sole determinant of association plan status under ERISA. So that means the state can pass the bill and move on to other issues.
Nope. Luck of the Irish.
The letter from Teresa Miller is so “definitive” and so “concise” and such “controlling law” that the state House determined that it had no other choice but to set aside a bill that 38 senators failed to recognize as preempted by federal law. At least, that was the message I got when I finally arrived on our beloved American shores. With luck, the bill’s status might change again.
I don’t know whether being sick in an Irish pub is better or worse than the political drama of health care reform; either way, you need a pint of Guinness. I wish politics would go on vacation and we could actually contemplate the consequences (and care about them) of forcing perfectly good insurance producers out of business to create a new-fangled market that forces small employers to abandon perfectly good health plans in return for “reforms” that Washington State largely implemented years ago.
I pass along the advice of my new friend in Ireland who upon hearing what I do for a living gave me these Irish words, “It is better to spend money like there’s no tomorrow than to spend tonight like there’s no money!”
Words for government if I ever heard them.