In Tough Times, We Need Leadership, Not Interference, From Lawmakers

2/5/09

Likely you have heard about the large and growing budget problem we have in our state. Right now the gap between projected tax revenues and spending obligations is over $6 billion and it is expected this will grow by another $1+ billion by the next revenue forecast in March.

With this significant financial problem hanging over their heads you would expect that the majority of legislators would be spending their time trying to deal with making government more efficient, prioritizing spending, and finding creative ways to stimulate the economy. And most of them are.

Yet in the last few weeks a number of bills have been introduced that have nothing to do with economic recovery. In fact, many are taking direct aim at our technology industry with efforts to hinder the use of RFID technology, put state government in the middle of website privacy policies, and most disturbing—significantly changing how young technology companies get health insurance.

WARNING: Discussion of insurance issue to follow–may be arcane and sleep-inducing.

A little background is in order. The Washington Technology Industry Association (WTIA), like many other trade associations sponsors an Association Health Plan (AHP). Health insurance companies who work with Associations can use “adjusted community rating” to produce the rates and premiums they charge companies under AHPs which allows them to have flexibility from standard rating requirements. A report from a nonpartisan research firm indicated that AHPs are approximately 11% less expensive than the small group market plans. This is different than “community rating” where the pool is one very large group—in the case of an alternative to an AHP – this would be the “small group” market, which consists of all employers, in all industries that have 2 to 50 employees.

Both have advantages and disadvantages. If you buy your health insurance through an Association like the WTIA, you are in an AHP. If you buy your health coverage directly from an insurance carrier outside of an association plan and your company is under 50 employees, you are in the small group market. In the small group market, your experience is spread across a large group so rate increases could be lower if the total group has lower claims costs. But it could go much higher if the group has higher claims costs.

The same is true of AHPs, but under the law, health carriers can work with an association to design a plan tailored to that group, including wellness options and other incentives to be healthy. This allows the (smaller) group to control health care costs better and allows greater flexibility.

So where is this all leading?

Two bills just introduced in Olympia, House Bill 1712 and House Bill 1714 aim to remove the flexibility in the law that AHPs enjoy. Why? … Next Page »

Ken Myer is currently an Interim Executive In Residence at the UW Center For Commercialization. He also serves on the board of FIRST. Follow @

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