Making Sense Of Health Insurance

Bob Jones
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Wednesday - June 16, 2010
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J.P. Schmidt

Ever wonder why you can buy home, car or long-term care insurance from whatever company anywhere that offers cheapest, best-coverage policies? But your health insurance must be from HMSA, Kaiser, UHA or HMAA?

I did, and went to get us an answer from outgoing state insurance commissioner J.P. Schmidt. Here it is:

Those four companies are nonprofits, and our Legislature consistently has exempted them from the 4.265 percent tax on insurance premiums. For-profits pay the tax and say they can’t compete. Summerlin insurance tried, but finally sold to HMAA. Aetna and some others would like to come here but say not if they’re paying the tax and the nonprofits are not.

HMSA (67 percent of the healthcare business here) lobbies heavily every year to stay exempt. So does Kaiser (22 percent.) They claim tax-exempt nonprofits can give the best coverage for the best price. They also don’t want outside competition from the biggies.


And on their behalf I should add that while for-profits can raise capital from investors to compete, nonprofits cannot. So there would be some disparity.

It’s not about potential price wars to drive the nonprofits out of business. One of commissioner Schmidt’s powers is to make sure rates are neither unjustifiably high nor predatorily low. It’s not about coverage, because almost all the business here is employer-provided, prepaid health care and that’s regulated by a citizen’s advisory council under our Industrial and Labor Relations Department. It’s standardized coverage.

Most states have parity - either every insurer pays the tax or nobody does. Not us. But we are the only state with the employer-prepaid health care requirement.

Minnesota’s governor wants his people to be able to buy health insurance across state lines, something we cannot. You can move here and keep your outof-state insurance provided your insurer offers doctors and hospitals here that accept it. But if you have a claim dispute, our commissioner will not intervene on your behalf.

I tend to go with Arizona Rep. John Shadegg, who says, “If you turn on the television station at night you see Allstate and GEICO and Progressive and State Farm pounding each other’s heads in. You never see that kind of advertisement for you and I to go out and buy health insurance.”

In a recent Brookings Institute poll, two-thirds of Americans supported cross-state, competitive health care insurance, including 69 percent of Republicans, 64 percent of Democrats and 61 percent of independents.

Here’s one more thing to ponder. Our employer-provided health care law says it expires if there’s a federal full-coverage law. There, now, is that, and it goes into full effect in 2014. That federal exemption for Hawaii won’t count unless our law is changed or Congress amends the reform law to say: “Nothing here applies to Hawaii.”

But that would mean no public insurance exchanges and no high-risk pools, either.

Auwe! Maybe the last job I’d ever want to have is state insurance commissioner.

Editor’s note: Two days after Bob Jones filed this column, Mr. Schmidt resigned to take a job with the law firm Bays Deaver Lung Rose and Holma, where he’ll focus on insurance issues.

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