Who should regulate Washington's insurance industry?

Local accountability groups testify against a bill that would wipe out Washington state's elected insurance commissioner.
Sen. Randi Becker (upper left)

Sen. Randi Becker (upper left) John Stang

Washington Insurance Commissioner Mike Kreidler at a 2009 rally in support of health care reform.

Washington Insurance Commissioner Mike Kreidler at a 2009 rally in support of health care reform. seiuhealthcare775nw/Flickr

Mike Kreidler, Washington state's current insurance commissioner, has a big job. Kreidler is responsible for overseeing a department that both protects consumer interests in Washington's insurance industry and regulates the industry itself. He was elected to the position, a four-year term, in 2012 with 54.6 percent of the state's vote. The next runner-up had just 21.8 percent.

The results of that election would be void under a new bill being debated in the state Legislature. That bill, introduced by Sen. Randi Becker, R-Eatonville, last week, would strip Kreidler of his position, replacing him with a Legislature-nominated board and a board-appointed insurance director who would oversee Washington state's entire insurance commissioner office starting January 1st of 2015. 

On Monday, Becker's bill was brought before the Senate Health Care Committee (of which Becker is the chair). Kate Nichol, a private citizen from Bothell, was its sole supporter, testifying that the commissioner's office did not respond to a concern about her family's prescription coverage disappearing.

Meanwhile, the AARP, the Washington State Labor Council, the Service Employment International Union Local No. 775, the American Cancer Society and the Washington State Association for Justice all testified in favor of keeping Washington's insurance commissioner. An elected insurance commissioner, they argued, is directly accountable to voters, while a board nominated by legislators is not. Representatives also worried that a 10-person board would dilute accountability.

"The bill, as currently written, would have the [director] responsible to an unelected board," testified AARP lobbyist Mary Clogston. Larry Shannon, lobbyist for the Washington Association for Justice, said insurance companies are not covered by anti-trust laws, and contended an elected insurance commissioner would be the best consumer advocate to deal with that situation.

Becker, who earlier criticized the commissioner's office for slow approval of insurance carriers under the Affordable Care Act, said she introduced the bill because some people don't believe the insurance commissioner's office is listening to them. A board nominated by legislators, she said, would be more receptive.

"This bill will cause a lot of people a lot of grief. Those bill will cause a lot of people joy, depending on what side you're on ..." she said. "This, to me, will create an environment where people will have. ... a broader sense of representation."

While he did not testify Monday, Kreidler, who is currently serving his fourth four-year term, contended last week that an insurance commission board would limit the office's public accountability: Insurance companies cannot legally donate to the campaigns of insurance commissioner candidates, but there is no such rule about Washington state legislators.

In a news release on Monday, Kreidler argued that Becker's bill "is tailor-made for the insurance industry to have its way with consumer protections at the expense of the public." "This bill," he wrote, "creates an insurance board made up of members nominated by members of the Legislature and appointed by the Governor. The public loses its right to select its own advocate. Washington is one of 11 states with an elected insurance commissioner. If the public are not satisfied with the job they’re doing, there’s a referendum on their performance every four years through our democratic process.”

This is the second Senate Republican bill introduced this session that would purge a regulatory entity and replace it with a Legislature-selected board. Sen. Sharon Brown, R-Kennewick, submitted a bill that would replace all current members of the Public Disclosure Commission — currently appointed by the Governor — with a five-person board. Of the five members, four would be appointed by the Legislature and the fifth would be selected by the first four members. 

John Stang covers state government for Crosscut. He can be reached by writing editor@crosscut.com.


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Comments:

Posted Tue, Feb 4, 1:04 a.m. Inappropriate

Jeez, are Republicans on a path to politicize everything, with cronies chosen by partisan political caucuses? Reminds me just a little too much of how things work in states like New Jersey. The GOP should work on fixing the things that are broken, and keep their hands off the things that aren't.

Posted Tue, Feb 4, 9:19 a.m. Inappropriate


Jeez, are Republicans on a path to politicize everything, with cronies chosen by partisan political caucuses? Reminds me just a little too much of how things work in states like New Jersey.

New Jersey? What this scheme really looks like is that the republicans are taking a page from the Washington state democrats' playbook. The democrats here work hard at creating and maintaining governing boards filled with political appointees to serve the interest groups comprising that party's base, and they do those things at the expense of the public's interests.

Take Sound Transit – it does not even have a constitutional structure because the democrats were so fixated on ensuring that people here never would be able to exert any political control over who would set its legal policies. Everybody gets this, right? Sound Transit is a new, unprecedented form of municipality that exists here despite a constitutional limit that is supposed to guarantee Americans political powers over policy-setting boards.

Sound Transit is an oligarchy. Fifteen of the eighteen members of that “regional transit authority” board are political appointees. People here have no control whatsoever over the policies its appointive board sets OR who sets those local laws. We can not elect smarter, more frugal, or more ethical individuals on to that board.

Don't like “business as usual” at Sound Transit? Tough nuts. You can't change who controls its board or set new legal policies for it via political means.

Any lawyers or judges read Crosscut? I'll set out a legal proposition: Sound Transit is an unconstitutional oligarchy. Somebody should try arguing the other side of that issue. I know “R. on Beacon Hill” won't give that a try.

Here's the thing – the kind of governance structure the state legislature created for that municipality, coupled with the broad powers its enabling legislation delegated to it, violates the 14th Amendment. All anyone has to do to verify I'm correct is glance at the relevant legal standard, examine the relevant facts, and it becomes obvious the relevant legal standard wasn't met by our state's legislators in 1992.

The relevant legal standard when it comes to ascertaining whether or not an appointive-board public entity’s structure complies with what the 14th Amendment requires is supplied by a 1967 US Supreme Court opinion known as _Sailors v. Kent Bd. of Education_. You can read it here:

http://supreme.justia.com/cases/federal/us/387/105/case.html

That longstanding authority addresses how appointive-board entities only may be delegated narrow powers, powers that merely allow them to effectuate legal policies established by representative legislative bodies superior to them.

The relevant 14th Amendment legal standard from that opinion is the one courts would use to ascertain whether or not a state’s legislature delegated excessive governmental powers and functions to a municipality’s appointive board. It involves comparing the powers delegated to the subject local entity to the handful of powers Michigan’s legislature had delegated to its county school boards by the mid-1960’s.

The _Sailors v. Kent Bd. of Education_ opinion explains that Michigan’s legislature stayed within the limits the 14th Amendment imposes on it and all other state legislatures. The Court’s analysis of that issue proceeds from the following premise:

“We find no constitutional reason why state or local officers of the nonlegislative character involved here may not be chosen by the governor, by the legislature, or by some other appointive means, rather than by an election.”

Michigan’s legislature only had delegated narrow powers to its county school boards. Those boards only could administer certain legal policies that had been established at the state level by a directly-elected body. That is why those boardmembers were “of the non-legislative character”. In the terminology used by the US Supreme Court, those powers only allowed that public entity to perform "essentially administrative functions", so it was not required to have a directly-elected board.

In contrast, Sound Transit's board was empowered by our state's legislature to set a wide range of governmental policies that affect millions of people and have significant, permanent financial and transportation impacts. The powers and functions delegated to it were not merely administrative, which means that municipal board must be directly elected.

Now, who wants to argue Sound Transit has a constitutional structure, one that complies with what the Fourteenth Amendment demands in terms of voters' rights to control by political means the legislators who set policies for municipalities?

crossrip

Posted Tue, Feb 4, 8:41 a.m. Inappropriate

"Becker, who earlier criticized the commissioner's office for slow approval of insurance carriers under the Affordable Care Act..."

Yes... because a Legislature-nominated board would have a much more streamlined decision-making process than a single elected official.

"Becker... said she introduced the bill because some people don't believe the insurance commissioner's office is listening to them."

Yes... because a board-appointed insurance director would be so much more beholden to the people than an elected insurance commissioner.

Posted Tue, Feb 4, 9:10 a.m. Inappropriate

This isn't going to go anywhere.... is it?

Posted Tue, Feb 4, 10:24 a.m. Inappropriate

Gosh, I hope not! We've been lucky to have a string of excellent insurance commissioners who have kept the insurers corralled at least a little bit. If this becomes law, then consumers will have even fewer protections than we have now. The board and its "director" would be bought and paid for by the insurers, with the result that the balance of power would be shifted much further to the insurer side. Already, the insurers are doing pretty well at collecting premiums but excluding from coverage most things that have any likelihood of triggering a duty to pay benefits, and making it so costly and stressful to collect even benefits they acknowledge are due that consumers give up and don't get what they paid for because the hassle is too great. I'd be interested to know more of the backstory on those who propose this.

mspat

Posted Tue, Feb 4, 11:59 a.m. Inappropriate

If it ain't broke, don't fix it. The State Insurance Commissioner is arguably the most effective public servant around. This bill is an insurance industry Trojan Horse. The industry desperately wants to neuter a regulator who keeps them from running amok. Don't be fooled by this gimmick.

woofer

Posted Tue, Feb 4, 2:56 p.m. Inappropriate

If you check Senator Becker's family history, you will find ties to the medical industry and the insurance industry. Two major players who hate independent watchdogs. I want the Insurance Commissioner to report to me, one of Washington State's multitude of voters, not some party hacks appointed by Senator Becker and her cronies.

Posted Thu, Feb 6, 10:53 p.m. Inappropriate

well, the bill moved out of committee today. I think that makes it now a serious proposal.

LShannon

Posted Fri, Feb 7, 8:40 p.m. Inappropriate

Damn. How doe we get Mike Kriedler to be the Commissioner in charge of the WSDOT?

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