"NEW SECTION.  Sec. 1   (1) The legislature finds that:
     (a) As a result of escalating health care costs, small employers are finding it more and more difficult to offer health benefits to employees and their dependents, and their employees are struggling to pay their share of rising premiums;
     (b) An estimated one hundred fifty thousand state residents who are either employees of small businesses or are dependents of employees of small businesses are uninsured, and these employees and their dependents account for a quarter of the state's uninsured population; and
     (c) An erosion in employer-based coverage, as demonstrated by data showing a decrease in the percentage of people under sixty-five who have employer-based coverage from seventy-one percent in 1993 to sixty-six percent in 2004, is detrimental to the health of uninsured employees and puts additional cost pressures on small businesses and other employers that provide health benefits.
     (2) The legislature further finds that building public-private partnerships in which employers, employees, and the public share in the cost of health care holds the promise of expanding coverage and reducing the adverse cost consequences of caring for uninsured populations.
     (3) It is the intent of the legislature that the state, in collaboration with carriers and small businesses, develop mechanisms to provide small businesses, particularly those who currently are unable to purchase health benefit plans, with affordable and meaningful coverage options that meet the health care needs of employees and their families.

NEW SECTION.  Sec. 2   For purposes of this chapter "small employer" and "carrier" have the same meaning as in RCW 48.43.005.

NEW SECTION.  Sec. 3   By January 1, 2007, the health care authority established under chapter 41.05 RCW shall implement a program to assist small employers in providing meaningful health care coverage to their employees and employees' dependents. The program shall:
     (1) Offer a choice of health benefit plans at varying prices that are consistent with the requirements of section 4 of this act, including a high deductible plan that may be used in conjunction with a health savings account;
     (2) Require an affordable premium contribution from participating employers and employees, subsidized as available federal, state, local, or other funding allows and if necessary to provide meaningful coverage;
     (3) Be designed to: (a) Encourage small employers that do not offer health coverage to do so, and discourage those that offer coverage from dropping it in favor of the small employer assistance program; (b) meet the needs of small employers in different areas of the state; and (c) meet the needs of small employers with differing work force characteristics;
     (4) Use appropriate and effective risk management mechanisms where they would reduce the cost of coverage;
     (5) Collaborate with and make maximum use of existing federal, state, local, and other programs providing coverage or health care to the uninsured, particularly those who are employed by small employers.
     Initially, the program may be offered in limited areas of the state, but if so, the health care authority shall develop a plan for expanding the program statewide.

NEW SECTION.  Sec. 4   Any health benefit plan offered under the small employer assistance program shall reflect the conscientious, explicit, and judicious use of current best information and data with regard to patient care. In designing the schedule of benefits and cost sharing, the authority shall:
     (1) Include preventive care services, based on the recommendations of the United States preventive services task force, with minimal enrollee cost sharing;
     (2) Include other benefits determined to be the most efficacious and cost-effective within the limits affordable to small employers and their employees, given the available subsidy;
     (3) Structure enrollee cost sharing to discourage demand for inappropriate or unnecessary treatment, encourage enrollee responsibility, including the use of efficacious and cost-effective services and products, and promote quality care.
     A carrier may offer any health benefit plan available under the small employer assistance program to any small employer, whether through the small employer assistance program or otherwise.

NEW SECTION.  Sec. 5   In contracting with a carrier to offer coverage under the small employer assistance program, the health care authority shall ensure that the carrier:
     (1) Actively educates enrollees regarding responsible health care decision making and encourages their engagement in health promotion and wellness activities and their receipt of appropriate preventive services;
     (2) Actively seeks to identify and encourage appropriate, efficacious, and cost-effective care by its providers based on evidence of best practices and promotes the use of quality providers by its enrollees;
     (3) Actively seeks to identify enrollees with, or with the potential for, chronic or other high-cost conditions and provides them coordinated care through disease and demand management programs;
     (4) Actively encourages innovative, efficient, and patient-centered facility designs and service delivery methods that improve enrollee access to care and health outcomes.
     If the health care authority implements a self-insured plan, it shall be responsible for these requirements.

NEW SECTION.  Sec. 6   The activities and operations of the small employer assistance program, including carriers to the extent of their participation in the program, are exempt from the provisions and requirements of Title 48 RCW except:
     (1) Carriers are subject to RCW 48.43.022, 48.43.500, 48.43.505 through 48.43.535, 48.43.545, and 48.43.550;
     (2) Persons appointed or authorized to solicit applications for enrollment in a plan offered under the small employer assistance program, including employees of the health care authority, must comply with chapter 48.17 RCW. For purposes of this section, "solicit" does not include distributing information and applications for the small employer assistance program and responding to questions; and
     (3) Amounts paid to a carrier representing the premium contribution of employers and employees must comply with RCW 48.14.0201.

NEW SECTION.  Sec. 7   The health care authority may implement a self-funded or self-insured method of providing insurance coverage, as provided in RCW 41.05.140, under the small employer assistance program if no carrier is willing to provide coverage under the program in a given area and the health care authority has received a certification from a member of the American academy of actuaries that the funding available in the small employer assistance self-insurance reserve account is sufficient for the self-funded or self-insured risk assumed, or expected to be assumed, by the authority.

NEW SECTION.  Sec. 8   The health care authority shall consult with interested parties in its development of the small employer assistance program and shall provide a progress report on its implementation to the legislature by December 1, 2005. The report shall: (1) Identify and provide an explanation for any variance in the program design from the requirements of Title 48 RCW; (2) discuss funding options to support the subsidy of small employer program enrollees; and (3) identify any additional statutory changes necessary to meet the intent of the program.

NEW SECTION.  Sec. 9   The health care authority may adopt rules to implement this chapter.

NEW SECTION.  Sec. 10   (1) Beginning July 1, 2006, the health care authority may accept applications for premium assistance from individuals whose current small employer has not offered health insurance within the last six months, on behalf of themselves and their spouses and dependent children. The health care authority may determine the minimum premium contribution to be paid by small employers whose employees are participating in this premium assistance option.
     (2) To the extent of funding provided in the biennial operating budget, the health care authority may make premium assistance payments to help employees pay their premium obligation for their employer's health benefit plan when:
     (a) The individual seeking premium assistance, plus the individual's spouse and dependent children: (i) Is not confined or residing in a government-operated institution, unless he or she meets eligibility criteria adopted by the health care authority; (ii) has gross family income at the time of enrollment that does not exceed two hundred percent of the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services; (iii) resides within the state of Washington; and (iv) meets the definition of eligible employee as defined in RCW 48.43.005;
     (b) The premium assistance paid would be less than the subsidy that would be paid if the individual, or the individual plus his or her spouse and dependent children, were to enroll in the Washington basic health plan under chapter 70.47 RCW as subsidized enrollees. The amount of an individual's premium assistance shall be determined by applying the percent of premium subsidy paid for subsidized basic health plan enrollees under RCW 70.47.060 to the employee's premium obligation for his or her employer's health benefit plan;
     (c) The premium assistance enrollee agrees to provide verification of continued enrollment in his or her small employer's health benefit plan on a semiannual basis, or to notify the health care authority whenever his or her enrollment status changes, whichever is earlier. Verification or notification may be made directly by the employee, or through his or her employer or the carrier providing the small employer health benefit plan. When necessary, the health care authority has the authority to perform retrospective audits on premium assistance accounts.
     (3) The health care authority may adopt standards for minimum thresholds of small employer health benefit plans for which premium assistance will be paid under this section. The office of insurance commissioner under Title 48 RCW shall certify that small employer health benefit plans meet any standards developed under this subsection.
     (4) The health care authority, in consultation with small employers, carriers, and the office of insurance commissioner under Title 48 RCW, shall determine an effective and efficient method for the payment of premium assistance and adopt rules necessary for its implementation.
     (5) Funds received by a family as part of participation in the adoption support program authorized under RCW 26.33.320 and 74.13.100 through 74.13.145 may not be counted toward a family's current gross family income for the purposes of this chapter. No premium assistance may be paid to an employee whose current gross family income exceeds twice the federal poverty level or who is a recipient of medical assistance or medical care services under chapter 74.09 RCW.

NEW SECTION.  Sec. 11   Sections 1 through 10 of this act constitute a new chapter in Title 70 RCW.

NEW SECTION.  Sec. 12   (1) The sum of five hundred thousand dollars, or as much thereof as may be necessary, is appropriated from the general fund to the health care authority for the fiscal year ending June 30, 2006, to carry out the purposes of this act.
     (2) The sum of two hundred twenty-four thousand dollars, or as much thereof as may be necessary, is appropriated from the general fund to the health care authority for the fiscal year ending June 30, 2007, to carry out the purposes of this act."