Mike Kreidler (Photo: Washington State Office of the Insurance Commissioner)

Mike Kreidler, the Washington state insurance commissioner, has imposed fines on two health insurance market players in the past two weeks.

Kreidler announced that Health Plan Intermediaries Holdings LLC, an arm of Health Insurance Innovations Inc., has agreed to pay a $1.5 million fine to resolve allegations concerning its appointments with two insurers, its affiliations with 434 insurance producers, the registration of a "doing business" as name, and the authorization status of some of  the products it sold in Washington state.

Kreidler announced Dec. 30 that he has ordered another organization, Trinity Healthshare Inc., to pay a $150,000 fine, and blocking the organization from operating in Washington state after 2020, in connection with the allegation that Trinity has marketed itself as a health care cost sharing ministry without meeting Washington state's legal definition of a health care cost sharing ministry.

Resources

• Links to information about Washington state's action against Health Insurance Innovations Inc. are available here.
• Information about Washington state's action against Trinity Healthshare is available here.
• A link to Health Insurance Innovations' statement is available here.

None of the allegations included in the Health Insurance Innovations order or the Trinity Healthshare order seems to involve a failure to pay the promised benefits.

In each order, an executive from the targeted company acknowledges that the company has consented to entering into the order.

Company responses

Health Insurance Innovations — a Tampa, Florida-based company that has been best known as a seller of a short-term health insurance and supplemental insurance products, such as dental insurance and vision benefits — noted in a response that, in December, the company announced it would be shifting toward sales of Medicare plans, and away from other types of plans. Health Insurance Innovations calls its non-Medicare business its "individual and family plan" (IFP) business.

"In light of the previously announced de-emphasis of our IFP business, we made a strategic decision to settle this legacy matter with Washington rather than continue with a time-consuming and costly legal process that we don't believe would benefit our stakeholders," Gavin Southwell, Health Insurance Innovations' president, said in the settlement announcement.

Health Insurance Innovations paid $3.4 million to resolve a 42-state state insurance regulator investigation in 2018. Washington state says it opted out of that settlement.

Trinity Healthshare said in a response to the Trinity Healthshare order that the order will let Trinity to continue to facilitate health care sharing among its current Washington members through 2020.

Trinity Healthshare also noted that the organization is organized under Section 501(c)(3) of the Internal Revenue Code as a non-profit health care sharing ministry.

"Trinity connects members with health care sharing needs with members who are willing to share with and support them in their time of need," Trinity said. "Earlier this year, the Washington insurance commissioner issued an ex parte order directing Trinity to stop selling its sharing programs to Washington residents. The order, however, allowed Trinity to continue to facilitate sharing among its current Washington Members. Trinity requested an administrative hearing to dispute and rectify the allegations made in the order.

"Unfortunately, the Washington commissioner made it clear from the beginning that he was not interested in allowing Trinity to operate in Washington because of Trinity's prior agreement with a service provider that the commissioner disfavors. Trinity is disappointed that the commissioner jumped to the conclusion that Trinity's health care sharing ministry is not providing a valuable and meaningful service to its members without first discussing, much less validating a single complaint with Trinity.

"Trinity was prepared to defend its operation's compliance with Washington law, but once we requested a hearing to do so, the Office of the Insurance Commissioner offered to discuss a consent order that would resolve the dispute without spending valuable member resources by litigating with a commissioner who is hostile to the valuable health care sharing alternative to spiraling health care premiums that conventional insurers have imposed on Washington citizens for decades. Trinity agreed to the consent order without admitting any wrongdoing or noncompliance with Washington law. As a result of the consent order, Trinity will unfortunately stop offering its health care sharing option in Washington at the end of 2020. At Trinity we are committed to our members and will continue to facilitate sharing among current Washington members through 2020."

The background

Starting in January 2014, the Affordable Care Act of 2010 began to require major medical insurance policies for individuals and families to meet many ACA benefits and underwriting requirements. An issuer of individual major medical coverage must, for example, cover at least about 58 percent of the actuarial value of a basic "essential health benefits" package for all insureds, aside from some users of catastrophic health coverage.

An ACA-compliant insurer cannot consider factors other than age and location when deciding whether to sell someone individual coverage, or when setting the price of the coverage. An ACA-compliant individual policy must provide coverage for maternity care and mental health benefits.

The ACA provides exemptions from the usual ACA rules for short-term health insurance and for health care cost sharing ministries.

The administration of President Donald Trump recently gave issuers of short-term health insurance a boost by letting short-term health insurance policies stay in effect for up to 364 days, if a state allows that, and to let consumers use renewals to keep short-term coverage in place for up to three years, if a state and the coverage issuer allow that.

Advocates of short-term health insurance and health care cost sharing ministries argue that the arrangements can provide packages of the benefits that consumers want most at prices the users can afford.

Proponents of short-term health insurance note that the issuers are subject to state insurance regulation and that, in some cases, short-term policies offer provisions that are more favorable to consumers than the provisions of ACA-compliant policies are. Many issuers of ACA-compliant policies now use narrow networks to hold down coverage costs. Short-term health insurance issuers note that many of their policies give insureds access to large provider networks.

Many states have avoided trying to regulate health care cost sharing ministries. Advocates for the ministries say that many have been in place for more than 100 years, and that they provide a means for members of faith-based communities to live according to their religious principles.

The concerns

Issuers of ACA-compliant coverage, and many health policy specialists and state insurance regulators, have argued that letting health care payers outside of the ACA-compliant coverage market grow could destabilize the ACA-compliant issuers, by pulling many of the younger, healthier people out of the ACA-compliant coverage market.

Speakers at a National Council of Insurance Legislators (NCOIL) meeting held this past summer suggested another concern, for the health care cost sharing ministries, is that rapid growth could cause administrative and financial problems for the health care cost sharing ministries.

NCOIL speakers suggested that some health care cost sharing ministry managers had expressed an interest in finding a way to expand states' ability to keep tabs on the ministries.

Washington state is not the only state action taking action on the health care costing sharing ministry issue. Regulators in Colorado and Texas have also announced ministry-related compliance actions.

Related: 

• Washington state takes on health care sharing ministry program
• Why some Americans are forgoing health insurance
• Who's buying short-term health insurance, and why?