Background:

I. Health Benefit Exchanges.

The federal Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 (ACA) requires every state to establish a Health Benefit Exchange (Exchange). The ACA requires two Exchanges, one for small businesses and one for individuals, which may be administratively operated as one entity. If a state elects not to establish an Exchange, the federal government will operate one either directly or through an agreement with a nonprofit entity. The Exchange's functions must include:

facilitating the purchase of qualified health plans by individuals and small groups;
certifying health plans as qualified health plans based on federal guidelines;
providing information to individuals about their eligibility for public programs like Medicaid and the Children's Health Insurance Program and enrolling eligible individuals in those programs;
operating a telephone hotline and website to assist consumers in the Exchange; and
establishing navigator programs to help inform consumers and facilitate their enrollment in qualified health plans in the Exchange.

In 2011 the Legislature established its Exchange as a public-private partnership separate from the state. The Exchange is to begin operations by January 1, 2014, consistent with federal law and statutory authorization. The Exchange is governed by a nine-member board appointed by the Governor from a list submitted by all four caucuses of the House of Representatives and the Senate. The powers and duties of the Exchange and the board are limited to those necessary to apply for and administer grants, establish information technology infrastructure, and other administrative functions. Any actions relating to substantive policy decisions must be made consistent with statutory direction.

II. Market Rules.

The ACA specifies four categories of plans to be offered through the Exchange and in the individual and small group markets. The categories are based on the actuarial value of the plans; i.e., the percentage of the costs the plan is expected to pay:

Platinum: 90 percent actuarial value;
Gold: 80 percent actuarial value;
Silver: 70 percent actuarial value; and
Bronze: 60 percent actuarial value.

III. Qualified Health Plans.

Only qualified health plans may sell insurance in the Exchange. In order to be a qualified health plan, a carrier must, at a minimum:

be certified as a qualified health plan based on federal guidelines;
provide coverage for the essential health benefits;
offer at least one Silver and one Gold plan in the Exchange; and
charge the same premium, both inside and outside the Exchange.

IV. Essential Health Benefits.

Health plans that offer plans in the Exchange and non-grandfathered health plans in the small group and individual markets outside of the Exchange must offer a federally defined package of benefits called "essential health benefits." The essential health benefits must include, at a minimum, benefits within the following 10 categories:

ambulatory patient services;
emergency services;
hospitalization;
maternity and newborn care;
mental health and substance abuse services, including behavioral health treatment;
prescription drugs;
rehabilitative and habilitative services and devices;
laboratory services;
preventive and wellness services and chronic disease management; and
pediatric services, including oral and vision care.

On December 16, 2011, the United States Department of Health and Human Services issued a bulletin to solicit input from stakeholders on a regulatory approach that would allow states to choose a "benchmark" plan from the following:

the three largest small group plans in the state by enrollment;
the three largest state employee health plans by enrollment;
the three largest federal employee health plan options by enrollment; and
the largest Health Maintenance Organization (HMO) plan offered in the state's commercial market by enrollment.

Under this approach, the state would have to supplement the benchmark plan if the plan did not cover the 10 categories of essential health benefits. Health plans would have the option to adjust benefits as long as all 10 categories were still covered and the value of the plan is substantially equal.

V. The Basic Health Option.

Under the ACA, a state may contract with private insurers to provide coverage for low-income individuals between 133 and 200 percent federal poverty level, similar to Washington's existing Basic Health Plan. Individuals in the Basic Health Program (BHP) will not participate in the Exchange, but the state will receive federal funding for the BHP equal to 95 percent of the tax credits and cost-sharing reductions the individuals would have received in the Exchange.

VI. Risk Leveling.

The ACA contains a variety of mechanisms to address adverse selection both inside and outside of the Exchange, including:

the individual mandate;
authorizing open enrollment periods; and
requiring health carriers to pool risk both inside and outside of the Exchange.

In addition, the ACA creates two temporary and one permanent risk leveling mechanisms:

Reinsurance: a temporary program administered by the state nonprofit entity, the Reinsurance mechanism requires most health plans (both inside and outside the Exchange) to make payments to the nonprofit entity that will then disburse those funds to plans with higher-risk enrollees.
Risk Corridors: a temporary program administered by the federal government, the Risk Corridor mechanism is designed to compensate for the difficulty of establishing initial rates in the Exchange. Plans that have lower than expected costs will make payments to the federal government. The federal government will then disburse those funds to plans with higher than expected costs.
Risk Adjustment: a permanent plan administered by the states, the Risk Adjustment mechanism assesses plans with lower-cost enrollees and makes disbursements to plans with higher-cost enrollees.

VII. The Washington State Health Insurance Pool.

Before purchasing insurance on the individual market, Washington residents must complete the Standard Health Questionnaire. Based on the results, an individual may be turned down for coverage. The Washington State Health Insurance Pool (WSHIP) provides health insurance to individuals who have been rejected from the individual market for medical reasons. A WSHIP insurance plan may impose a six-month waiting period for preexisting conditions. Premiums for the WSHIP plans must be between 110 percent and 150 percent of what the largest carriers charge for individual plans with similar benefits.

VIII. Catastrophic Plans.

Under the ACA, health plans may offer catastrophic plans to individuals inside and outside of the Exchange. Catastrophic plans are subject to an annual deductible of $5,950 for individuals and $11,900 for families (the deductible does not apply to preventive benefits and up to three primary care visits). The plans are only available to individuals who are both under the age of 31 and exempt from the individual mandate.

Under state law, a catastrophic health plan is defined as:

a health plan requiring a calendar year deductible of at least $1,880 for individuals ($3,760 for multiple persons) and an annual out-of-pocket expense required for covered benefits of $3,760 for individuals ($6,450 for multiple persons); or
a health plan that provides benefits for hospital inpatient and outpatient services, provides benefits for professional and prescription drugs provided in conjunction with the hospital services, and excludes or substantially limits outpatient physician services and those services usually provided in an office setting.

IX. Wellness Program Demonstration Projects.

Under the ACA, the federal Department of Health and Human Services must establish a 10-state wellness program demonstration project. Under the program, states will apply employer wellness program criteria to programs of health promotion offered by individual market insurers. A state that participates in the program may permit premium discounts, premium rebates, or cost-sharing modifications based on participation in a health promotion program and must:

ensure that consumer protection requirements are met;
require verification that premium discounts do not create undue burdens for enrollees, do not lead to cost shifting, and are not a subterfuge for discrimination;
ensure that consumer data are protected; and
ensure that the discounts or other rewards reflect the expected level of participation in the program and the anticipated effect the program will have on utilization or claim costs.

Summary of Engrossed Second Substitute Bill:

I. Health Benefit Exchanges.

The Exchange is named the Evergreen Health Marketplace. Beginning December 1, 2013, the Chair of the Exchange Board (Board) serves at the pleasure of the Governor. Voting members of the Board may lobby on issues relating to the Exchange or the implementation of the ACA, but only to provide information or communicating on matters pertaining to official Board business or to advocate the official position of the Board. A voting Board member may communicate with a legislator on issues related to the Exchange or the implementation of the ACA on the request of the legislator or to communicate to the Legislature, through official proper Board-approved channels, requests for legislative action or appropriations deemed necessary for the efficient conduct of the Exchange or actually made in the proper performance of his or her duties of a voting Board member.

The provisions limiting the authority of the Exchange are eliminated. The Exchange is authorized to serve as a premium aggregator and to complete other duties necessary to begin open enrollment beginning October 2, 2013. The Exchange may charge and equitably apportion among carriers the administrative costs and expenses of the Exchange and must develop a methodology to ensure that the Exchange is self-sustaining. The Board must establish rules or policies permitting entities to pay premiums on behalf of qualified individuals. The Exchange must report its activities to the Governor and the Legislature as requested, but no less often than annually. Beginning December 1, 2013, the Chair of the Board serves at the pleasure of the Governor.

The Exchange's authority to direct expenditures in the Health Benefit Exchange Account is removed and the account is expired effective January 1, 2014.

Exchange employees are authorized to participate in state health benefit and retirement programs.

II. Market Rules.

The following market rules are created:

For plan or policy years beginning January 1, 2014, if a carrier offers a Bronze plan outside the Exchange, it must also offer Gold and Silver plans outside the Exchange.
Catastrophic plans (as defined in the ACA) may only be sold inside the Exchange.

Additionally, the Insurance Commissioner may adopt a rule that prohibits a carrier from offering a Bronze plan outside the Exchange unless it offers the same plan inside the Exchange. The Insurance Commissioner may only adopt the rule if he or she finds, in consultation with the Board, that (1) the Exchange is experiencing (or is likely to experience) adverse selection; or (2) consumers do not have adequate choice of health plans inside the Exchange. The rules may not go into effect until one full regular session of the Legislature has passed.

The Insurance Commissioner must evaluate Platinum, Gold, Silver, and Bronze plans and determine whether variation in prescription drug benefits results in adverse selection. If so, the Insurance Commissioner may adopt rules to assure substantial equivalence of prescription drug benefits.

All health plans outside of the Exchange, other than catastrophic plans, must offer plans that conform to the Platinum, Gold, Silver, and Bronze value tiers specified in the ACA.

III. Qualified Health Plans.

The Board must certify a health plan as a qualified health plan if the plan:

is determined by the Insurance Commissioner as meeting state insurance laws and regulations;
is determined by the Board to meet the requirements of the ACA; and
is determined by the Board to include tribal clinics and urban Indian clinics as essential community providers in the plan's provider network consistent with federal law. An integrated delivery system may be exempt from the essential community provider requirement if consistent with federal law.

The Board must allow stand-alone dental plans to be offered in the Exchange. Dental benefits offered in the Exchange must be priced separately to assure transparency for consumers.

The Board must establish a rating system for qualified health plans to assist consumers in evaluating plan choices in the Exchange. Rating factors must, at a minimum, include:

affordability with respect to premiums, deductibles, and point-of-service cost-sharing;
enrollee satisfaction;
provider reimbursement methods that incentivize health homes or chronic care management or care coordination for enrollees with complex, high-cost, or multiple chronic conditions;
promotion of appropriate primary care and preventive services utilization;
high standards for provider network adequacy, including consumer choice of providers and service locations and robust provider participation intended to improve access to underserved populations through participation of essential community providers, family planning providers, and pediatric providers;
protection of the privacy of patients' personal health information;
high standards for covered services, including language spoken or transportation assistance; and
coverage of benefits for tax-deductible spiritual care services.

The Office of the Insurance Commissioner retains regulatory authority over qualified health plans sold in the Exchange.

IV. Essential Health Benefits.

The Insurance Commissioner must, by rule, select the largest small group plan in the state by enrollment as the benchmark plan for determining the essential health benefits.

The Insurance Commissioner must, in consultation with the Board and the Health Care Authority (HCA), supplement the benchmark plan as needed to ensure that it covers all 10 categories of essential health benefits specified in the ACA. A health plan required to offer the essential health benefits by federal law may be offered in the state, unless the Insurance Commissioner finds that it is substantially equal to the benchmark plan. When making the determination, the Insurance Commissioner must ensure that the plan:

covers the 10 essential health benefits categories required by the ACA;
does not have a plan benefits design that would create a risk of biased selection based on health status; and
contains meaningful scope and level of benefits in each of the 10 essential health benefits categories.

Beginning December 15, 2012, and every year thereafter, the Insurance Commissioner must submit to the Legislature a list of state-mandated health benefits, the enforcement of which would result in federally imposed costs to the state. The list must include the anticipated costs to the state of each benefit on the list. The Insurance Commissioner may enforce a benefit on the list only if funds are appropriated by the Legislature for that purpose. During any period of time funds are not appropriated, the mandate is suspended and may not be enforced.

It is clarified that nothing in the act prohibits the offering of benefits for tax-deductible spiritual care services in plans inside and outside of the Exchange.

V. The Basic Health Option.

The HCA must provide the necessary certifications to the federal government to establish the BHP, unless, by September 1, 2012, the Governor finds:

anticipated federal funding will be insufficient to cover the essential health benefits through 2019:
- at enrollee premium levels below the Exchange;
- using payment rates that exceed 2012 Medicaid rates and are sufficient to ensure access to care for enrollees and incentivize an adequate provider network, in conjunction with innovative payment methodologies and standard health plan performance measures that will create incentives for the use of effective cost containment and health care quality strategies; and
- assuming reasonable BHP administrative costs and the potential impact of funding reconciliation; and
sufficient funds are not available to support the design and development work necessary for the program to begin providing coverage beginning January 1, 2014.

Prior to making the finding, the HCA must:

consult with the Board, the Office of the Insurance Commissioner, consumer advocates, provider organizations, carriers, and other interested organizations; and
consider any available objective analysis specific to Washington by an independent, nationally recognized consultant that has been actively engaged in analysis and economic modeling of the BHP for multiple states.

If adopted, the BHP must be guided by the following principles:

meeting minimum state certification standards specified in the ACA;
twelve month continuous eligibility and enrollment or financing methods mechanisms that enable enrollees to remain with a plan for the entire plan year;
achieving appropriate balance with:
- premiums and cost-sharing minimized to increase affordability;
- standard health plan contracting requirements that minimize plan and provider administrative cost, while holding standard health plans accountable for performance and enrollee health outcomes, and ensuring adequate enrollee notice and appeal rights; and
- health plan payment rates that that exceed 2012 Medicaid rates and are sufficient to ensure access to care and incentivize adequate provider networks, in conjunction with innovative payment methodologies and standard health plan performance measures that will create incentives for the use of effective cost-containment and health care quality; and
transparency in program administration.

VI. Risk Leveling.

The Insurance Commissioner, in consultation with the Board, must adopt rules establishing the reinsurance and risk adjustment programs required by the ACA.

The rules for the reinsurance program must establish:

a mechanism for collecting reinsurance funds;
a reinsurance payment formula; and
a mechanism to disburse reinsurance payments.

To compensate carriers offering plans in the Exchange for the possibility of increased risk in the Exchange and to incentivize carrier participation in the Exchange, the reinsurance rules may make any or all of the following modifications to the payment formula:

a lower attachment point inside the Exchange;
a higher cap inside the Exchange (or no cap at all inside the Exchange); or
a higher coinsurance rate inside the Exchange.

The reinsurance rules may also include requirements to ensure appropriate cost containment measures by carriers, such as care management or care coordination. The Insurance Commissioner may adjust the rules to preserve a healthy market both inside and outside of the Exchange.

The Insurance Commissioner must contract with one or more non-profit entities to administer the risk adjustment and reinsurance programs and must identify the data needed to support operation of the reinsurance program, the sources of the data, and other requirements related to their collection, validation, interpretation, and retention.

VII. The Washington State Health Insurance Pool.

The WSHIP Board must evaluate and analyze the following and report its recommendations to the Governor and the Legislature by December 1, 2012:

the populations that may need ongoing access to pool coverage, including persons with end-stage renal disease or HIV/AIDS or persons not eligible for Exchange coverage;
modifications to pool eligibility that would allow new enrollees in the WSHIP on or after January 1, 2014, including any needed modifications to the standard health questionnaire or other eligibility screening tool that could be used to determine pool enrollment; and
pool assessments in relation to the assessments for the federal reinsurance program and recommendations for changes in the assessment or any credits that may be considered for the reinsurance program.

For policies renewed on or after January 1, 2014, rates for pool coverage may be no more than the average individual standard rate charged for comparable coverage by the five largest carriers, measured in terms of individual market enrollment, in the state. If five carriers do not offer comparable coverage, the rates may be no greater than the standard risk rate established using reasonable actuarial techniques and must reflect anticipated experience and expenses for such coverage in the individual market.

The WSHIP must reduce an enrollee's premium obligation as needed to provide him or her with premium subsidies equivalent to what he or she would have received in the Exchange. An enrollee is eligible for this reduction if he or she:

has a modified adjusted gross income below 400 percent of federal poverty level;
is not enrolled in Medicare; and
does not have an offer of minimum essential coverage.

VIII. Catastrophic Plans.

Part of the current definition of "catastrophic health plan" is made applicable only to grandfathered health plans issued before January 1, 2014, and renewed thereafter. A grandfathered plan is a catastrophic health plan if it requires a calendar year deductible of at least $1,880 for individuals ($3,760 for multiple persons) and an annual out-of-pocket expense required for covered benefits of $3,760 for individuals ($6,450 for multiple persons). The part of the definition dealing with a health plan that (1) provides benefits for hospital inpatient and outpatient services, (2) provides benefits for professional and prescription drugs provided in conjunction with the hospital services, and (3) excludes or substantially limits outpatient physician services and those services usually provided in an office setting, is eliminated.

For non-grandfathered health plans issued on or after January 1, 2014, a "catastrophic health plan" is defined as:

a health plan that meets the definition in the ACA; or
a health benefit plan offered outside the Exchange that requires a calendar year deductible or out-of-pocket expenses for covered benefits that requires a calendar year deductible of at least $1,880 for individuals ($3,760 for multiple persons) and an annual out-of-pocket expense required for covered benefits of $3,760 for individuals ($6,450 for multiple persons).

IX. Wellness Program Demonstration Project.

The HCA must pursue an application to participate in a wellness program demonstration project as authorized in the ACA. The HCA must pursue activities that will prepare the state to apply for the demonstration projection once it is announced by the federal government.

EFFECT OF SENATE AMENDMENT(S):

The Senate amendment makes changes in the following areas:

The Exchange:

adds a definition of "self-sustaining;"
requires the Board to develop a methodology to ensure that the Exchange is self-sustaining;
requires the Board to submit recommendations to the Legislature (if the Legislature takes no action, the Board may implement the recommendations);
removes the requirement that the chair of the Board serve at the pleasure of the Governor;
removes the lobbying restrictions on Board members; and
allows an employer to specify a level of coverage in which its employees must enroll.

Market rules:

removes the authority of the Insurance Commissioner to prohibit a carrier from offering a Bronze level plan outside the Exchange unless it offers the same plan inside the Exchange; and
requires the Board, in consultation with the Insurance Commissioner, to make recommendations as to whether to sunset or maintain the market rules.

Qualified health plans:

allows the Board to permit direct primary care medical home plans to be sold in the Exchange (consistent with federal law);
clarifies that the administrative rules with which a qualified health plan must comply must be related to Title 48 RCW (insurance);
clarifies that the rating system must be consistent with the ACA; and
makes the rating factors permissive, rather than mandatory, and removes the protection of a patient's health information from the list of rating factors.

Essential health benefits:

makes the Insurance Commissioner's consideration of biased selection and meaningful benefits permissive, rather than mandatory;
requires the list of state mandates submitted by the Insurance Commissioner to include statutory changes needed if funds are not appropriated to defray the costs for the mandates; and
removes language stating that mandates that are not funded are suspended and may not be enforced.

The Basic Health Option:

requires the Health Care Authority to report to the Legislature on the Basic Health Option by December 1, 2012;
places the decision as to whether to adopt the Basic Health Option with the Legislature, rather than the Governor;
removes the requirement that payment rates exceed 2012 Medicaid rates; instead, requires the payment rates to be sufficient to ensure robust provider networks and health homes;
requires the Health Care Authority to assume the Basic Health Option will be adopted if funding is provided specifically for that purpose; and
allows the Health Care Authority to cease implementation activities if the Legislature decides not to proceed with implementation of the program.

Risk Leveling:

requires the Insurance Commissioner to analyze an "invisible high risk pool" option for the reinsurance program;
removes the Insurance Commissioner's authority to modify the reinsurance payment formula;
removes the Insurance Commissioner's authority to adopt rules encouraging appropriate cost management measures by carriers;
allows, instead of requires, the rules adopted by the Insurance Commissioner to include the submission of data needed to support the operations of the risk adjustment and reinsurance programs; and
allows contribution amounts for the reinsurance program to be increased to cover the costs of the administration of the program.

The WSHIP:

requires the WSHIP recommendations to consider persons who will have inadequate coverage after January 1, 2014;
removes the payment formula for WSHIP coverage on or after January 1, 2014;
authorizes the WSHIP to contract with the Insurance Commissioner to administer the risk management functions in the ACA;
authorizes the WSHIP to conduct pre-operational and planning activities related to the risk management functions; and
requires the WSHIP to submit recommendations to the Legislature regarding changes to the WSHIP Board if it contracts to administer the reinsurance program.

Catastrophic Health Plans: clarifies that the out-of-pocket maximums for catastrophic plans must be adjusted consistent with the ACA.

Suspension: suspends the Exchange if it is no longer self-sufficient.

Navigators: clarifies that navigators are not considered as soliciting or negotiating insurance.

Emergency clause: expands the emergency clause to cover provisions of the act dealing with risk management and participation of Exchange employees in public health benefit and retirement programs.

Staff Summary of Public Testimony (Health Care & Wellness):

(In support) The Exchange is at the heart of the ACA. This bill will keep the state in line with key deadlines and will allow providers and carriers to start making decisions. This bill builds on the success of last year's process, including the selection of a board. The bill does not overreach; it does not add qualified health plan criteria or adopt the Basic Health Option. The bill also addresses adverse selection, which was not adequately addressed in the ACA. The issue of what to do with the WSHIP is also addressed. The establishment of an Exchange will drastically increase access to insurance and foster competition based on price, quality, and service. The current system is too complex. Individuals and businesses need a simple way to compare plans. The additional market rules will ensure a level playing field inside and outside of the Exchange; we should not wait to see if the ACA's risk leveling mechanisms fail before the state does something. The definition of small group should be increased to 100 to ensure a larger risk pool. The state should pursue the Basic Health Option, which will increase affordability, lead to greater enrollment, result in fewer care disruptions, and will foster integrated delivery models. Lower income individuals are price sensitive. The Board and the Insurance Commissioner should be able to foster an optimal combination of choice, quality, and value. The Exchange should not become the new high risk pool; there should be more plans inside and outside of the Exchange to spread risk. Plans should be required to offer inside the Exchange if they offer outside the Exchange. The process for selecting the essential health benefits should be transparent. Plans should not be allowed to shift risk onto sick people. Tribes should be allowed to sponsor the premiums of tribal members and tribal providers should be essential community providers. The WSHIP funding is inadequate; the funding is not spread across the entire market. The Board should be responsive to the needs of providers. The state should consider leaving the WSHIP open.

(Information only) The WSHIP needs statutory changes to prepare to administer the reinsurance program required by the ACA.

(In support with concerns) The Legislature should maintain substantive control over Exchange policy. Giving authority to the Insurance Commissioner and the Board to impose more requirements on qualified health plans will limit competition and could fundamentally re-make the market. The WSHIP should have a broader role; it could even become an issuer in the Exchange. The tools in the ACA are sufficient to manage risk; they should be allowed to function on their own.

(With concerns) The ACA already recognizes the potential for adverse selection. The risk leveling mechanisms in the ACA should be allowed to work before the state imposes additional market rules. This bill gives too much authority to the Board.

(Opposed) There is no need for additional market rules. Bronze plans will have to be significantly cheaper outside the Exchange to compete with the subsidized premiums inside the Exchange. Even if the plans could be offered cheaply outside the Exchange, the ACA's risk leveling mechanisms will come into play. The state should examine additional market rules only after there has been more experience with what is in the ACA. Uncertainty and the perception that the ACA will make coverage more expensive is leading to many small businesses dropping coverage. The market rules in this bill will limit the number of available plans inside and outside of the Exchange and will increase costs. This bill deviates from the ACA. The bill also removes legislative oversight.

Staff Summary of Public Testimony (Ways & Means):

(In support) This bill is a work in progress and there are a lot of moving pieces. There are a lot of different ways to address the problems it deals with. The bill tries to balance flexibility for the board to be able to make the decisions it needs to make while retaining legislative oversight.

There is very little in federal health reform that directly addresses costs, but there are tools that allow states to drive down costs. This bill selectively utilizes those tools to address costs. It addresses consumer needs in the marketplace to ensure that enough plans offer products inside and outside the Exchange while addressing adverse selection. The state is going through a budget crisis and it is struggling to develop a sustainable budget. There is no more important area to address than health care.

Costs will only go down if people are able to afford and purchase coverage, otherwise they will go to the emergency room (ER) and receive expensive care. This bill helps avoid paying for ER services for the uninsured, which are paid by taxpayers and others with insurance. There is no reason that citizens of Washington should pay 30 percent more than other countries, and 33 of 34 other industrialized countries pay 30 percent less for health care than Washington citizens do.

Insurance can save lives and money for cancer patients because it helps patients receive earlier diagnoses instead of expensive treatment at later stages. Insurance helps people with asthma purchase their medications, which keeps them out of the ER.

This bill represents the possibility of bringing federal funding into the state. This includes Exchange development grants. It also includes subsidies for populations with incomes up to 400 percent of the federal poverty level to make health care affordable for people in the state. The Medicaid expansion is not directly linked to the bill, but there is an impact and it is largely funded with federal dollars.

The BHP is a key provision of the bill. It is an essential program to get people covered and make coverage affordable by bending the cost curve. The BHP will reduce the number of uninsured individuals and promote continuity of coverage. Estimates show that it could increase enrollment for eligible populations by as much as 50,000 people. It could also be more affordable than the products available in the Exchange.

This legislation goes a long way for provider rates. The language requires payment rates sufficient to provide access to care. Providers should be reimbursed at rates that reflect reasonable costs for services provided while incentivizing quality and outcomes. Rates determine the sizes of networks and without networks there is no access to care.

A continued and expanded role for the WSHIP will be critical to stabilize the Exchange risk pool. Plunging the WSHIP enrollees into the Exchange right away would immediately overload the Exchange with a high cost population. The HIV and AIDS groups have concerns about closing the WSHIP because it provides a robust pharmacy benefit.

The bill allows Washington to make choices instead of letting the federal government make decisions for Washington.

(With concerns) Establishing the Exchange should be the highest priority in the bill. As it relates to market rules and requirements on plans, the bill should focus on the ACA standards and state laws without applying additional requirements. The language in the bill goes a long way to support this. The Office of the Insurance Commissioner should be required to use objective actuarial analyses when implementing rules.

The BHP could generate costs to the state. Development of information technology systems for eligibility determination and oversight would be a state responsibility and there is no federal match. The state will receive less federal funding if this option is exercised. The BHP could also jeopardize the viability of the Exchange by reducing the number of people buying insurance in the Exchange. Providers are paid less than cost in Medicaid, and vague language in the bill could allow that to happen in the BHP. Access would be a fiction unless rates are substantially above Medicaid levels. With over 300,000 new Medicaid enrollees, providers are thinking of leaving Medicaid and the BHP. The language on rates and innovative payments is vague and should be defined. There is no time limit on implementing the BHP so the priority should be on getting the Exchange running. The HCA should not establish the BHP unless findings are made affirmatively.

(Opposed) This bill should focus on simple compliance with the requirements of the ACA, which is not a de minimis standard. The bill should have clear instructions that the Exchange entity will only pursue the activities necessary to qualify for Level Two funding under the ACA.

The Legislature should also retain policy making authority instead of giving the power to the Office of the Insurance Commissioner and the Exchange Board.

The bill should encourage a diversity of plans inside and outside the Exchange.

The ACA will impose requirements that will inevitably increase premiums such as the "metallic" benefit values. This is a math question. The state cannot substantially increase the amount an insurer will pay relative to enrollees without increasing premiums.

Small businesses have huge concerns. The state needs to know more about the fiscal impacts before acting. Small businesses do not understand health care reform at all. They have no idea what they can buy or what it costs. Many have unfortunately decided that they will probably just drop out and discontinue benefits for employees. Insurance is hard to afford now and businesses are concerned about whether they will be able to afford it later. It will cause a great deal of dislocation if people currently insured by employers become uninsured. Many of the businesses with less than 50 employees will not participate.

It is unclear whether the funding for the BHP will be sufficient to provide the Essential Health Benefits in plans with affordable premiums and provider reimbursement rates that are robust enough to encourage provider participation. The Governor should have to answer questions about the availability of funding, but the obligation should be flipped. The Governor should be required to answer these questions before the HCA files the necessary papers for adoption of the BHP with the federal government.

There is litigation at the federal level to undo the ACA. If the lawsuit is successful at a minimum the individual mandate will be removed. The entire act could be rendered unconstitutional so the bill should include a null and void clause to prevent the state from being on the hook for additional costs.