Bert Caldwell: Insurance issue pits Kreidler against Senn

A lawsuit challenging interpretation of Washington law regarding small business insurance has brought together the incumbent and former state insurance commissioners — on opposite sides.

And the positions taken by present commissioner Mike Kreidler and predecessor Deborah Senn put them in uncharacteristic roles, he as the reformer, she as the defender of the status quo.

The quiet Kreidler is trying to assert more authority over health insurance programs offered by business associations, Associated Industries and the Association of Washington Business among them. In December, he issued a Technical Assistance Advisory telling the associations they were improperly setting premiums for member companies based on claims filed. The larger the claims, the higher the premiums.

Such experience rating within an association is barred by Washington law, Kreidler said.

Premiums should be set using community ratings, which treat each member business the same, he says. The result is fairly uniform premiums for all.

AWB and AI strongly objected to Kreidler’s interpretation of the law, which was based on action taken by the Washington Legislature in 1995. But months of negotiation with his office last fall failed to resolve the dispute, so the two sides agreed to hand the matter to a judge. AI filed suit in February, with AWB joining the case almost immediately.

The outspoken Senn threw her expertise behind their effort in April, when she submitted a 21-page declaration that attacks almost every argument Kreidler relies on in his TAA.

Yet it was Senn who was the champion of community rating during the eight years, 1992 to 2000, she was commissioner. As an advocate for broad-based health care, she argued that community ratings would bring down the cost of insurance for individuals and businesses priced out of the market.

Hers was not a popular argument, especially during a tough period for insurers, who were inclined to not sell policies they could not underwrite based on their claims experience. Lawmakers were sympathetic.

As Senn notes in her declaration, the 1995 Legislature exempted small groups from community rating to encourage more small businesses to insure their employees.

“I was not particularly supportive of the exemption,” Senn says in her filing. “I believed that allowing an insurer to ‘experience rate’ smaller groups … did not accomplish the objective behind community rating.”

Senn lost that battle but, having lost, she bowed to the legislature’s will. Kreidler, she says, is pursuing changes that contradict the law and bypass normal rule-making procedures.

Senn, now an expert witness with an international practice, was paid for her declaration. But she says she “took a pretty hard look” before opposing an office and incumbent she respects.

Senn says she called Kreidler as a courtesy before her declaration was filed. Her participation, and her position, were a bit of a shock.

“It was a surprise she would be on the other side of the issue,” Kreidler spokeswoman Stephanie Marquis says.

Although Senn, who left office voluntarily, and Kreidler have had little contact since the commissioner’s job changed hands, Senn’s support for community rating was well-known.

The commissioner’s attorneys have asked Judge Kathleen O’Connor to disallow Senn’s written testimony. That motion, and others, were scheduled for hearing Friday in O’Connor’s courtroom, but has been rescheduled for June 19th.

Senn, by the way, has no opinion on the wisdom of the legislature’s decision to allow experience rating for associations.

AWB and AI officials say as many as 500,000 workers and their families benefit directly or indirectly from the reforms they advocated a decade ago. Community rating could strip many of health care coverage, they warn.

Would it not be ironic if their old foe helped them carry the day?

Business columnist Bert Caldwell can be reached at (509) 459-5450, or at bertc@spokesman.com.