NAHU Washington Update - 05/03/2019  (Plain Text Version)

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In this issue:
•  Fast Facts
•  NAHU Promotes Private Health Choices as House Holds Medicare-for-All Hearing
•  State Spotlight: Washington Passes First “Public Option” Bill
•  House Holds Prescription Drug Hearing as CBO Releases Rebating Rule Analysis
•  One Week Remaining for Legislative Council Applications
•  Healthcare Happy Hour: Debriefing the Medicare-for-All Hearing
•  Register for This Month’s Webinar on Form 5500 Reporting
•  Register for the Catalyst for Payment Reform’s Virtual Event on May 17
•  HUPAC Roundup: Putting Congeniality Back in Congress
•  What We're Reading


State Spotlight: Washington Passes First “Public Option” Bill

The Washington State legislature has officially passed the first public-option bill in the United States, a move that media outlets are referring to as unprecedented...

The Washington State legislature has officially passed the first public-option bill in the United States, a move that media outlets are referring to as unprecedented in U.S. healthcare policy. In actuality, this bill falls far from implementing the public-option system that most people may imagine. SB 5526 institutes regulated standardized health plans managed by private insurance companies, a law that many states have already enacted. 

When one hears the term “public option,” many imagine a route to universal coverage that allows the government itself to sell insurance. Unlike single-payer, the conventional public-option system would allow the private insurance industry to continue selling plans on the exchange; the government would simply offer its own plan, which residents can choose to opt into. In last week’s State Spotlight, we discussed Colorado’s legislature, where a public option bill had gained bipartisan support. That bill would permit the state government to offer a government-funded plan that would compete with private insurers in the individual market. This aligns much closer with what most people think when they hear the term “public option.”

Washington State’s public option plan, dubbed “Cascade Care,” is not the same as Colorado’s or any of the public option proposals at the federal level. Instead, SB 5526 would require the Washington State Exchange to create a state-contracted insurance option known as a standardized plan, with a standardized plan for each tier of coverage from Bronze to Gold. The Washington Authority along with other stakeholders, would set the numbers for deductible amounts, premiums, cost-sharing, and other vital aspects of a health insurance plan. The state would then require any insurer operating within the state exchange to offer these standardized plans to all Washingtonians who are not covered by employer-sponsored plans.

Although plenty of noise is being made about this forthcoming law, it is not a radical departure from initiatives other states have taken. Democrats are quite proud of their bill, which they claim to be a middle ground between conservative and liberal healthcare initiatives. “This bill has a lot of support from many of the major health care associations,” Sen. David Frockt (D – Seattle) told reporters. “This is going to have better cost-sharing, and Washingtonians will be much better off for it.”

California was the first state marketplace to develop standardized plans for each coverage tier, with five more states and the District of Columbia following suit. Each state has a very different take on standardized plans. For example, California requires that carriers exclusively offer standardized plans, while New York requires carriers to offer standardized plans but also allows them to offer up to three non-standardized plans. In the case of Cascade Care, there is no limit on the amount of non-standardized plans carriers can offer as long as they offer at least one standardized plan for every metal level. It is important to note, however, that the legislation requires research to be done by 2025 on the potential impact that only offering standardized plans would have on the market.

Despite the private sector-friendly provisions, Washington’s take on the public option is still an example of increased government involvement in the marketplace. A key provision in the bill utilizes a component from the Medicare-for-All proposals at the federal level: caps on reimbursements to providers. Cascade Care caps the total amount these standardized plans would pay providers at 160% of the total Medicare would have paid for identical services. The legislation also raises the cap on eligibility for premium subsidies from 400% to 500% of the federal poverty level. This level of government intervention is obviously worrisome to some state Republicans, including Senator Steve O’Ban (R–University Place), who claimed conservative members of the legislature “are worried that this will distort the market.”

The state of Washington may not be implementing the “public option” bill that many are familiar with, but SB 5526 is still a bold (and possibly ill-considered) initiative. Governor Inslee, who announced in March that he is seeking the Democratic nomination for president in 2020, is expected to sign the bill into law any day now; however, the legislature must pass a funding mechanism for the bill by the end of June or the law will be invalidated regardless of the governor’s signature.