What’s in Washington’s passed public option bill
Washington’s public option bill passed through both chambers on the penultimate day of session, April 27. The bill now awaits the governor’s signature.
“I think we can feel very, very proud that we are the first state in the country to establish a public option, and I imagine that our option — Cascade Care — will serve as a model for other states going forward,” said Sen. Annette Cleveland, chair of the Senate Health and Long Term Care Committee, on the floor before the bill’s final passage.
While the bill maintained the general ideas in Gov. Inslee’s original proposal, parts of it changed substantially over the course of session.
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The bill no longer requires carriers to stop offering non-standardized plans on the Washington Health Benefit Exchange — Washington’s state-based marketplace for health and dental insurance — by 2025, for example. It does, however, require the Exchange and Insurance Commissioner to look at the impact of doing so and submit a report to the Legislature about it.
Along the same lines, the bill doesn’t require the Exchange to provide premium subsidies for people who need financial assistance. But, it requires the Exchange, Health Care Authority (HCA), and Insurance Commissioner to make a plan to implement and fund premium subsidies for people with incomes less than 500% of the federal poverty level.
Here are the basics of what the bill, as passed, does:
- Requires the Exchange to establish up to three standardized health plans for the bronze, silver, and gold levels that are “designed to reduce deductibles, make more services available before the deductible, provide predictable cost sharing, maximize subsidies, limit adverse premium impacts, reduce barriers to maintaining and improving health, and encourage choice based on value, while limiting increases in health plan premium rates;”
- Starting January 1, 2021, requires carriers that offer qualified health plans on the Exchange to offer a standardized silver plan and a standardized gold plan — and a standardized bronze plan, if they already offer a plan on that tier; and
- Requires HCA to contract with at least one carrier to offer plans — known as Cascade Care — on the Exchange, beginning in 2021. A carrier contracting with HCA has to offer at least one plan on all three tiers in at least one county, with the goal of offering plans in every county.
The main point of contention in the original proposal, starting with its first public hearing, was a requirement that Cascade Care plans reimburse providers and hospitals at no more than Medicare rates.
The bill’s early critics argued that — because Medicare reimbursement rates are higher than Medicaid rates and lower than rates on the individual market — the cap would limit Cascade Care patients’ networks, decrease doctors’ availability to Medicaid patients, and destabilize the market.
That reimbursement rate cap changed at nearly every step of the bill’s journey to passage. At one point, the Senate got rid of the cap altogether. That iteration of the bill passed out of the Senate on a bipartisan vote.
Ultimately, the conference committee included a reimbursement rate cap for all covered benefits in the statewide aggregate — aside from pharmacy benefits — at 160% “of the total amount that Medicare would’ve reimbursed providers and facilities for the same or similar services in the statewide aggregate.”
The final bill also sets a rate floor for rural hospitals at 101% of Medicare rates, and for primary care services at 135% of Medicare rates.
The conference committee also added a few paths to an exemption from the cap.
If HCA determines that selective contracting would result in premium rates that are the same or lower than the rates during a plan’s previous plan year adjusted for inflation, the HCA Director can consult with the Exchange and waive the requirement during the contracting process.
Basically, prime sponsor Sen. David Frockt said, that exemption means:
“If we can reset the rates at a lower threshold, and you can show that your rates will only grow by inflation, you can have a waiver of the cap.”
Or, the HCA Director can waive the cap for a carrier offering Cascade Care plans if:
- The carrier can’t form an adequate provider network because of the cap; or
- It can offer premiums that are 10% lower than the previous plan year through other means.
“The scenario I’m thinking of is: Let’s say one of the plans can put together a network and a plan that is going to be, on aggregate, 165% [of Medicare rates],” Frockt said in reference to the second waiver opportunity for carriers. “But the premiums for the people who buy policies are going to be 10% lower than they would’ve been, for other reasons. Maybe they can cross-subsidize within their lines of business, or there’s some other way…then they would have some flexibility.”
Frockt said he got the sense that flexibility was important to his caucus, and he knew putting the rate caps back in would make Senate Republicans “100% opposed.”
Before the bill’s final passage, Sen. Steve O’Ban, who voted for the bill without the rate caps, explained his ultimate “no” vote.
“We worry that this could distort the market,” O’Ban said. “That it will result in, actually, the smaller business market losing its insureds and those individuals coming over to this new product that, I think, artificially will have lower prices. A great concern to me is…that we’ll see providers drop some of those Medicaid-covered individuals trying to make it work financially to participate in this plan, with the lower reimbursement rates.”
The bill did, ultimately, lose Republican support in the Senate, passing on a 27-21 party-line vote. The House passed it 56-41, also along party lines.
Rep. Joe Schmick, Ranking Minority Member on the House Health Care and Wellness Committee, expressed concern about the waivers and other language in the bill during floor debate.
“It says in here, while it’s a goal to have coverage offered in every county, this bill says you don’t have to,” Schmick said. “If I’m a provider…why would I ever agree to the rates here? I’ll just hold out until I get what I want. And this bill allows that.”
In response to the criticism that waivers could give plans an out, Frockt said he didn’t think that was true.
“I don’t think so,” Frockt said. “Because the Director still has to make the decision on whether a plan is compliant or it’s not.”
In its final form, Frockt said, the bill gained support from additional stakeholders.
“I think this is a really good compromise, this bill has a lot of support from many of the major health care associations,” Frockt said in his floor speech. “Most importantly, in recent days…the Washington Academy of Family Physicians.”
Meg Jones, Executive Director of the Association of Washington Healthcare Plans, said the changes would “continue to generate concern among many of the plans,” and that “the carrier community stands ready to be fully engaged as stakeholders” as the details of implementation are determined.
“[The public option bill] will definitely change the individual insurance coverage marketplace in Washington State,” Jones said. “It’s unique, in the country, and we are going to be evaluating its effect as the different provisions of the bill are implemented. Because, truly, the way it will impact carriers is definitely tied to the approach that’s taken in implementation and the decisions that are made by the agencies during implementation.”
This story was cross-posted on our sister site, Washington State Wire.