Vicki Schmidt's transition from policy-making state senator to the state's top insurance industry regulator came with surprises.

Schmidt, a Republican who took office in January, said the Kansas Department of Insurance for more than 18 months collected $60,000 in fees from third-party insurance processing organizations without setting mandatory rules and regulations for the action. The cash had to be refunded and the necessary framework established to legally gather the fee.

"There have been a few bumps in the road," she told the Capitol Insider, a podcast of The Topeka Capital-Journal. "We inherited a few things."


Schmidt is a 63-year-old pharmacist who represented a Topeka district in the Kansas Senate from 2005 until January. She served on Senate committees with application to the job of insurance commissioner, including panels covering issues of health, financial institutions, insurance and administrative rules.

She said her election in November led to personnel changes at the insurance department along with adjustments in operational expectations of staff. Employees report to the department's office in Topeka rather than work from home, she said.

"As an elected statewide official, you need to have confidence in your team," Schmidt said. "We have a lot of great people who work in the insurance department."
The department has a broad agenda covering property and casualty insurance markets, regulation of securities and licensing of agents selling policies. It operates an anti-fraud unit and a consumer assistance division. In 2019, the department has licensed 9,000 agents, made 400 referrals related to consumer fraud and fielded 1,100 consumer complaints.

Schmidt's office doesn't have jurisdiction of self-insurance plans, including the health insurance program available to state employees. She has no power over management of Medicaid or Medicare serving hundreds of thousands in Kansas. That includes proposals to expand Medicaid eligibility to 130,000 Kansans under the Affordable Care Act. It's a necessary boundary that Schmidt said required her to remain neutral on formation of public policy and to focus on regulatory affairs.

"I did not like it when agencies overstepped their boundaries and tried to influence policy," she said.

Schmidt, by virtue of being elected state insurance commissioner, is part of a five-person board that holds power to set health insurance rates for state workers. Others on the Kansas Employees Health Care Commission represent the Kansas Department of Administration, Democratic Gov. Laura Kelly, state classified employees and retired classified workers.

During the past five years, the commission held the overall increase in the state's contribution to employee health costs to 8 percent.

At the same time, state employees with policies that included a spouse or family had rates increased 115 percent by the commission. State worker pay raises were repeatedly wiped out during the administration of Gov. Sam Brownback by consecutive insurance rate increases of 36.7 percent, 30.4 percent and 31.7 percent from 2016 to 2018.

The commission, with Schmidt as a member, recently voted to cut health premiums 6 percent in 2020 for employees on plans that included family or spouses. Other policies rates were held flat. The state's contribution is scheduled to climb 4.5 percent.

"If employees heard nothing else, I hope they heard they are valued," she said.

Schmidt was relieved by settlement of a lawsuit filed by her predecessor, Commissioner Ken Selzer, against the Brownback administration. Selzer challenged legality a $16 million sweep of regulatory fees paid by insurance agents to the department. To resolve the feud, the 2019 Legislature and Kelly agreed to repay the swept cash over a three-year period.

The clash ought to be sufficient to discourage future legislative and executive branches from dipping into regulatory fees accounts, Schmidt said, because it amounts to "unfair taxation of those who hold those licenses."