Legislative health care bills are not quite as advertised
At the request of Gov. Jay Inslee, Rep. Eileen Cody and Sen. David Frockt introduced companion measures, House Bill 1523 and Senate Bill 5526 respectively, which the governor heralded as a “public option” health insurance program for Washington state.
The bills are not quite as advertised.
Rather than a state-run, universal, single-payer health insurance or health care system as most would envision based on the “public option” moniker, the bills direct the state’s Health Benefit Exchange and Health Care Authority to develop requirements for health insurers to offer standard benefit design plans for sale in the state’s Obamacare exchange, the Washington HealthPlanFinder.
The state exchange enrolled about 200,000 people, many using federal subsidies, in health insurance plans for 2019. That’s about four percent of the state’s health insurance market.
Basically, standard benefit design health insurance plans would shift much of the cost-sharing components (like deductibles, co-payments, and co-insurance), also referred to as patient “out-of-pocket” costs, of an average health policy into the monthly premium.
These “standard plans” would be particularly well-suited to families and individuals having chronic, high-cost conditions who routinely find themselves paying the full deductible and out-of-pocket maximum during the plan year – often within the first quarter of the year. Think cancer, autoimmune diseases, blood disorders, and the like. The high cost of treatment and/or medications can force families and individuals to front tens of thousands of dollars early in the year before their health insurance policy starts paying. Shifting these out-of-pocket costs into a slightly higher monthly premium would make it easier for many families and individuals to budget and pay for these expenses.
NFIB was a member of the state’s Patient Out-of-Pocket Cost task force. We support that work group’s recommendation to allow standard benefit design plans in our state’s health insurance markets.
The challenge with these standard plans is that no health insurer wants to be the only one offering them. Doing so would attract more sick people, with particularly costly treatment needs, into those plans, making them even more expensive to operate. As a result, the state would need to mandate that every health insurer offer these plans, so the risk of higher-cost patients is spread among them. The bills would do just that.
However, HB 1523 and SB 5526 would make standard benefit plans the only type of health insurance policy offered through the state exchange by 2025. That’s where they lose NFIB’s support.
Not every individual or family buying health insurance through the exchange needs, or would want, a standard benefit plan. Healthier individuals, and those with low health care utilization, would generally prefer lower monthly premiums with higher cost-sharing requirements, anticipating they would be unlikely to hit their policy’s deductible or out-of-pocket maximum in a given year.
In fact, NFIB has long supported greater flexibility or customization of health insurance coverage components to better align plan design with patient needs – and their budget.
The bills require certain state agencies to develop a plan for a state-funded subsidy program for individuals and families making up to five times the federal poverty level; the existing federal subsidy applies only to those earning 400 percent or less of the federal poverty level. The plan would be due by November 15, 2020. NFIB objected to this provision, questioning whether enough data about standard plan enrollment and usage would be available so quickly.
The bills would also limit medical providers receiving payments under these plans to Medicare rates, which are typically lower than what private health insurance plans pay for the same procedures. NFIB left it in the capable hands of the state’s medical and hospital associations to address whether paying medical providers at Medicare rates would be adequate or result in cost-shifting to other segments of the private health insurance market.
Given the small share of the state’s health insurance enrollees affected by the proposals – about 4 percent – and the potential good of bringing standard benefit design plans to market, NFIB is not willing to fully oppose these bills at this time. Moreover, the governor’s office has repeatedly indicated a willingness to consider NFIB’s suggestions as it continues working with the bills’ sponsors and interested parties to improve the legislation.
For more information, contact Washington State Director Patrick Connor at 360-786-8675.
