Continued from previous page.
Medicaid Expansion
Early in the session, Governor Kelly announced
the creation of a Medicaid expansion working
group. The bipartisan group includes legislators
and healthcare industry stakeholders and
advocates. Kelly, who made Medicaid expansion
a campaign promise and budget priority, asked
the group to assist her in crafting legislation. The
legislation would expand those who are eligible
to receive Medicaid coverage as contemplated in
the Affordable Care Act. This issue will continue
to linger throughout the session. In spite of stiff
opposition to Obamacare among many legislators,
there is likely a bipartisan majority who would vote
to pass a Medicaid expansion bill. The Farm Bureau plan would allow them to offer
a health care benefit plan to their members. The
plans, which would be non-compliant with the
Affordable Care Act, are not defined as insurance.
But, the plans would be a fully-insured product
with a third party administrator. There has been
some opposition by insurance companies—Blue
Cross Blue Shield of Kansas and Medica—who sell
individual plans on the exchange. They contend
a non-compliant product will syphon healthy lives
from the exchange and drive up costs to their
consumers. The Farm Bureau has countered that
the experience in Tennessee, after which this
proposal is modeled, is quite the opposite where
rates have dropped.
Insurance Issues
This session has been packed with a bonanza of
bills on health insurance, particularly bills related
to Association Health Plans (AHPs). Both the
House and Senate insurance committees have
held multiple hearings on association health
plans and a member benefit plan, specific to
the Kansas Farm Bureau. The main impetus
for the AHP bills stems from federal changes
made by the Trump Administration. In 2017, the
administration implemented new regulations
under ERISA that relaxed some of the previous
regulations. The upshot of this was to allow
Association Health Plans to be rated as large
groups based on the total number of employees
in the entire plan. To be rated as a large group
you need more than 50 employees. So, assume
you have an AHP with 10 members, nine with
10 employees and one with 11 employees. Prior
to the new regs all 10 members would have to
be rated as small groups with much higher rates
than large groups. But under the new regs you
don’t individually rate each member. You group
them all together to determine whether they
can be rated as small groups or large groups. So,
under the new regs, all 10 members would get the
large group rates because the total group is 51
employees. Previously only members AHPs that
had more than 50 employees would get the large
group rates. Finally, a bill to address Kansas Supreme Court
case on attorney’s fees has been making it’s way
through the process. The bill is a reaction to the
Supreme Court’s fairly recent decision in the
Bussman v. Safeco case, which was based upon
statues which predate bundled policies. In other
words there were separate polices for liability,
property, etc. The problem is the current language
in the statute provides for attorney fees on any
policies that cover damage due to the perils named
in the statute. So, for example, auto policies now
cover damage for the perils named in the statute
but also have coverage for liability, collision and,
very importantly, UM/UIM coverage among other
coverages. In Bussman the Supreme Court held
the literal interpretation of the statutory language
would allow attorney fees in any first party claims
against a company where the the policy provided
coverage for the specified perils even if the
damage didn’t arise from any one of those perils.
This means it would apply to UM/UIM claims that
are technically first party claims against a company.
The Court acknowledged this was probably not the
intent of KSA 40-908, but felt it had to interpret
the statute this way since that is what it literally
said. This year’s legislation would amend the
statute to clearly state that it would only apply to
property damage caused by fire, lighting, tornado
or hail—the way the statute had always been
interpreted before the Bussman decision.