Insurance Commissioner Kreidler's New Rule

April 24, 2014

Washington State Insurance Commissioner Mike Kreidler is in the process of creating a new rule for health insurance companies selling policies in the state exchange. (Here) In an interesting turn of events, hospitals and insurance companies are lining up together to oppose the ruling, but for very different reasons.

A bit of background is needed.

Commissioner Kreidler originally made it very clear to insurance companies that they must keep their premium rates low and competitive in the new plans they offered in the state exchange. To keep premiums low, insurers limited the networks of providers in the plans. Several large organizations, such as Seattle Cancer Care Alliance and Seattle Children's Hospital, were not included in many new plans. Consumers revolted.

Kreidler's new rule addresses this issue. He wants to expand the networks and access for patients, but wants insurers to continue to limit the premium rates. Providers are upset that the rule doesn't go far enough to increase network size and the insurers are pushing back because their premium rates won't cover the cost of the expanded networks.

Unfortunately, Kreidler can't have it both ways. Either he will allow insurers to limit network size, hold costs down and limit patient access. Or, he will force insurers to expand networks and risk financial insolvency.

This entire crisis is the direct result of centrally-planned, government-run health care. Obamacare forces consumers into benefit-rich insurance plans that drive up costs. Insurance companies must offer these plans, yet still remain in business financially. If insurers can't raise rates to cover all the benefit and provider mandates, they will be at high risk for simply becoming public utilities. This may actually be the unstated goal of the government planners.