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Update for WA employers based on January 2002 Legislative Sessions
As of January 27, 2002
Help ahead for small-group market?Small employers just might get some less costly choices in health insurance via a bill introduced in the Washington State Legislature January 16. Although its ultimate fate is far from certain, House Bill 2430 revises portions of state law covering the small-group market (1-50 employees) that observers say have driven up costs and driven out would-be insurance competitors.
Key pluses and minuses of the HB 2430, as of today:
A plus - Insurance carriers would no longer have to offer coverage for all types (i.e., naturopaths, physicians, etc.) of health care providers. If the legislature okays that change, small employers could eventually choose among products ranging from "economy" to "comprehensive," based on the extent of providers covered.
A plus - Insurers might be able to drop products that are losing money, as long as they allow employees in the money-losing product to enroll in a different product. The requirement is called "guaranteed renewability," and its opponents argue that out-of-state insurance companies are steering clear of Washington state because of the requirement. If it is repealed, more insurers would be expected to enter the small-group market, resulting in more choices and lower costs for employers.
A minus - The bill does little to modify the basis on which insurance carriers set rates for the small-group market -it's still basically based on employees' age, sex family size and part of the state where they live. Employer groups want the type of industry to be factor in setting rates.
A minus - The bill mandates that a carrier offer five different products if it wants to offer any in the small-group market. That requirement could be a terrific burden to administer and it would deter out-of-state competition from coming in.
A minus - The bill would provide subsidies for low-income workers in small businesses, but to get the subsidy, the employer would have to offer one of the more comprehensive-and expensive-products to its workers. This provision also could create heavy administrative burdens.
What's ahead:
The bill will be heard before the House Health Care Committee on January 24. Employer groups, health insurance carriers, provider groups, and others are expected to weigh in with a multitude of suggestions to improve the bill. Expect certain provider groups to fight particularly hard against dropping the requirement to include all providers. To contact your legislator, go to www.leg.wa.gov.
Other Health Care Issues of Interest to EmployersHealth care is not expected to be a huge priority with lawmakers this session, in part because they're going to be spending much of their time fixing the shortfall in the current state budget (more than $1 billion in the red). Some health programs for low-income residents, including children, will probably be eliminated or cut back.
Mike Kreidler, Washington State Insurance Commissioner, in a January 16 speech- notable for urgent tone-proposed that all Washingtonians be required to carry basic health insurance in order to share health costs more widely and hence avert a looming crisis in health insurance. He also called on the state legislature to establish a group, composed of business, consumers and insurance representatives, to study possible solutions.
Update for WA employers based on February 2002 Legislative Sessions
As of February 27, 2002
A Different "War" On Drugs-ESB 6368An all-out battle is raging in Olympia this legislative session over a bill that would allow the State of Washington to use its buying power to get lower prices on prescription drugs. The bill would create both a "preferred drug list" and a competitive bidding process and would affect hundreds of thousands of Washingtonians with state-sponsored health insurance. Engrossed Senate Bill 6368, passed the Senate on February 18 and was heard in the House Health Care Committee on February 26.
What's behind ESB 6368: Prescription drugs with essentially identical effects on the patient can have very different costs. New and often heavily advertised "look-alike" drugs are partly responsible for rising drug costs. In tune with the times-and heeding the public's demands to stop wasting its money-the state wants to be a prudent and efficient buyer of prescription drugs.
How ESB 6368 would work: The state would appoint a committee of four physicians, three pharmacists, one nurse and one person with pharmaco-economics expertise to come up with a "preferred drug list," for example, to treat asthma, blood pressure, cholesterol, gastroesophageal reflux. (Such preferred drug lists are already commonly used by Regence BlueShield, Premera, Group Health Cooperative and other insurers.) Drugs on the list would be put out for bid to the pharmaceutical companies. The low bidders would land on the preferred list. Physicians and other providers would pick from the list when they write prescriptions for their Medicaid patients, state employees, schoolteachers and other persons covered by state-sponsored health insurance.
Who's supporting ESB 6368 and why: Supporters are the Washington State Medical Association, University of Washington Medical Center, AARP (senior citizens), Senior Lobby, Washington State Lung Association, American Heart Association and Gov. Gary Locke. Supporters argue that the bill will save the state money and improve the quality of patient care by reducing inappropriate drug use. The medical association supports the bill primarily because it will reduce doctors' administrative hassles. Rather than asking the state, sometimes on a patient-by-patient basis, for permission to prescribe particular drugs, every Washington physician would be supplied with the preferred drug list and prescribe accordingly. Physicians would still have the right to prescribe a drug not on the list if they believe the patient needed it and they could justify it.
Who's opposing ESB 6368 and why: Opponents are the Pharmaceutical Research and Manufacturers of America, the Association of Washington Business and the Biotechnology and Biomedical Association. Pharmaceutical manufacturers argue that the bill places "artificial and onerous restrictions" on patients' access to prescription drugs and that it focuses too much on cost. It may even increase overall health care expenditures and put patients at risk, they contend. The business association argues that the bill could harm the biomedical, biotech and pharmaceutical businesses in this state, including start-ups if investors pull back. The business association says that the bidding process and preferred drug list are forms of "price control" with well-known deleterious effects.
ESB 6368's prospects: Mixed. The opponents are taking out full-page newspaper ads warning of possible harm to consumers if the bill passes. If it does pass, it will do so only after a tremendous fight.
Why employers should pay attention: In health care, the public sector often leads the private sector in creating new programs and systems to deal with health care costs. Furthermore, if the low-bid prices are "too" low, pharmaceutical manufacturers might try to charge higher prices to private-sector businesses buying health coverage through Regence, Premera and the rest. Some would say that anything that reduces health care costs is good, but as the debate over this bill demonstrates, one person's reduction in costs is another person's reduction-or loss-of job opportunities.
Tell your legislator how you feel about this bill. To contact your legislator, go to www.awb.org.
Update for WA employers based on March 2002 Legislative Sessions
As of April 2, 2002
Legislative Wrap-Up: Advocates For Control Over Health Care Costs Faced Tough SleddingThe Washington State Legislature adjourned March 14 without acting on two bills designed to ease health-care cost pressures for business and government.
House Bill 2430 would have reformed the small-group health insurance market by, among other things, loosening the requirements on what health insurers must offer.
Proponents urged lawmakers to rescind the requirement that insurance carriers offer coverage for all types (i.e., naturopaths, physicians, etc.) of health care providers.
Opponents argued that the bill would leave out providers notably-chiropractors and psychologists-that consumers want. Opponents also were unenthusiastic about a section that would have created a pilot project where small businesses with low-paid workers would get a subsidy from the state for health insurance.
The upshot: Small employers still have few choices among health insurance products; they still can't select an "economy" plan with few provider types or a "comprehensive" plan with virtually all provider types.
Senate Bill 6368 would have allowed the State of Washington to use its buying power to get lower prices on prescription drugs. The bill would have created both a "preferred drug list" (often called a formulary) and a competitive bidding process and would have affected hundreds of thousands of Washingtonians with state-sponsored health insurance.
Proponents argued that the bill would respond to the public's call to responsibly spend taxpayer dollars. Proponents also agreed to permit physicians and other health care providers prescribing drugs to specify whatever drug they deemed necessary for the patient, whether that drug was on the formulary or not.
Opponents argued that SB 6368's provisions amounted to price controls. Opponents also argued that poor people and minorities would not get needed drugs and that the bill would cool the interest of biotechnology investors in Washington state.
The bill passed the state Senate, but died in the House in the closing hours of the session.
The upshot: Washington State will continue to pay for whatever prescription drugs physicians and other providers prescribe for state-sponsored patients. The battle in Washington State is part of a bitter national struggle. Washington was among an estimated 24 states in which a drug formulary bill was introduced this year, and more states are expected to introduce such legislation next year. With the national tab for health care at $1.3 trillion this year and states shouldering a substantial share of that load, the economic tug of war will get even more heated.
Legislative InterimBetween the end of the 2002 legislative session and the start of the next one in 2003, Gov. Gary Locke, Insurance Commissioner Mike Kreidler and members of the House Health Care Committee are expected to take a close look at other ways for the state to be a more prudent health care purchaser.
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