It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
OLYMPIA, Wash., March 19 -- The Washington stateOffice of the Insurance Commissioner issued the following news release:
The 2014 Legislative session ended March 13 with mixed results for Washington insurance consumers.
This year was a short 60-day session, which occurs every other year. The Office of the Insurance Commissioner sponsored three bills this session. Two would have brought Washington in line with model rules from the National Association of Insurance Commissioners (NAIC), which other states have adopted. A successful budget request restores funding to a study of health benefits for public school employees. The Legislature requested the initial study in 2012.
Insurance Company Solvency (House Bill 2461) (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2461) The Insurance Commissioner sponsored this bill,, which would have given us the tools needed to protect consumers from financial crises like the global recession of 2008. The bill included two model acts created by the NAIC to prevent such financial disaster from adversely affecting consumers.
One, called the Own Risk and Solvency Assessment (ORSA) Model Act, would require companies to create a plan for self-assessing and reporting their current and future financial information related to their two- to five-year business plans. This is designed to be an internal process for companies to ensure their solvency and to prevent financial disasters like the ones that occurred during the financial crisis of 2008.
The other, called the Holding Company Act, would enhance the Insurance Commissioner's s ability to monitor any insurance or other company under a parent company or holding company system. This bill would also give the Insurance Commissioner the appropriate tools to notify consumers when their investments or insurance policies are at great risk, in cases similar to Metropolitan Mortgage of Spokane, which went bankrupt in 2004. If the language contained in the model act is not adopted under state law by Jan. 1, 2016, Washington risks losing its NAIC accreditation.
If Washington loses accreditation, other state regulators would no longer be able to accept this state's financial exams of insurers. As a result, insurers would be subject to examinations in other states at a cost of $100,000 to $1 million per state. That cost would most likely be passed on to consumers through higher premiums for all types of insurance policies.
It may also have broader economic effects if insurers whose home headquarters is Washington opt to transfer that status to other states to avoid those costs. That could result in job losses and less tax revenue for Washington's economy.
This bill did not pass this session. The Insurance Commissioner will request the Holding Company Act next year.
Alien Insurer State of Entry (House Bill 1402/SB 5489) (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=1402) This bill would have modernized the terms under which international insurance companies--called "alien insurers" in the industry--could enter the U.S. market through Washington state. It would have required alien insurers to meet the same financial-strength standards and play by the same rules as U.S. companies that do business in Washington.
Although it had broad bipartisan support, the legislation failed to get a final vote in the Senate.
Data Study Funding Restoration
The Legislature passed Senate Bill 5940 (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=5940&year=2011) in 2012, requiring OIC to conduct a study of public school employee benefits and report the findings annually. The bill included an appropriation of $1.3 million, but last year's budget reduced the funding to $300,000. The supplemental state budget (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6002&year=2013) the Legislature passed this year includes $127,000 to pay for the next study during the 2015-17 biennium. The bill awaits a signature by the Governor.
Other bills that affect consumers
Health insurance consumers may also be interested in the following bills that have been sent to the Governor's Office for approval to become state law.
Senate Bill 6458 (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6458&year=2013) requires the Insurance Commissioner to provide notice to the legislative health care committees about proposed rules that are related to health insurance. Others that must be notified are the Washington State Health Benefit Exchange, the Washington Health Care Authority and the Governor's Office. The Legislature heavily amended the bill from its original purpose of replacing the statewide-elected Insurance Commissioner with a 10-member board that would have been primarily appointed by legislators.
The Insurance Commissioner seeks comment on proposed rules from interested parties and related agencies; this bill merely formalizes existing practice.
House Bill 2572 (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=2572&year=2013), requested by the Governor's Office, is a first step in health care cost transparency that aims to make price and quality information available to consumers, purchasers of health plans, state agencies and policymakers.
Among other things, the bill sets up a claims database and requires all state-regulated health insurance plans to submit details about paid claims. Self-insured employers, regulated by the federal government, are encouraged to participate in the database, called an all-payer claims database. Fifteen other states use them as a transparency tool for consumers.
The secure, easy-to-use database will aim to inform consumers about the actual price and quality of services, enhancing competition and driving down health care costs.
Senate Bill 6228 (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6228&year=2013) improves transparency tools for consumer information on health care costs and quality in two ways:
* Creates a committee to identify and recommend statewide measures of health performance to improve health care outcomes. Committee members will include state agencies, small and large employers, doctors, nurses, hospitals, the two largest health plans in Washington, patient health groups, consumers, and academic experts. The committee must submit its findings and recommendations by January 2015.
* Requires health insurance plans to offer online and mobile-friendly transparency tools to enrollees that include cost data for common treatments and prescription medications. Consumers would also have a place to leave online ratings and feedback about their experience with medical providers. They would also be able to get information about in-network providers that includes their contact information and location, credentials, links to any malpractice and disciplinary action, affiliations with hospitals and other providers. These transparency tools must be available in January 2016.
Senate Bill 6511 (http://apps.leg.wa.gov/billinfo/summary.aspx?bill=6511&year=2013) requires the Insurance Commissioner to establish a work group to develop recommendations for streamlining prior authorization of medical treatments and prescription drugs. The work group's recommendations are due to the Insurance Commissioner by Oct. 31, 2014.
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