HOUSE BILL REPORT
E2SSB 5304
As Reported By House Committee On:
Health Care
Revenue
Title: An act relating to health care.
Brief Description: Reforming health care cost control and access.
Sponsors: Senate Committee on Ways & Means (originally sponsored by Senators Talmadge, Gaspard, Moore, Deccio, Wojahn, Moyer, Snyder, Winsley, Fraser, Haugen, McAuliffe, Drew, Sheldon, Skratek and Pelz).
Brief History:
Reported by House Committee on:
Health Care, March 30, 1993, DPA;
Revenue, April 5, 1993, DPA(REV w/o HC)s.
HOUSE COMMITTEE ON HEALTH CARE
Majority Report: Do pass as amended. Signed by 10 members: Representatives Dellwo, Chair; L. Johnson, Vice Chair; Appelwick; Campbell; Conway; Flemming; R. Johnson; Morris; Thibaudeau; and Veloria.
Minority Report: Do not pass. Signed by 6 members: Representatives Dyer, Ranking Minority Member; Ballasiotes, Assistant Ranking Minority Member; Cooke; Lisk; Mastin; and Mielke.
Staff: Bill Hagens (786-7131).
Background: In its 1992 report, the Washington Health Care Commission concluded that although "Washington State residents with adequate resources receive some of the most technologically advanced medical care in the world, the health system is in trouble. Costs are rising out of control; spending for health services is increasing at two to three times the general inflation rate. At the same time, an estimated 550,000 to 680,000 Washington residents -- 11 to 14 percent of the state's population -- do not have health insurance. Moreover, the system emphasizes treating illnesses and injuries rather than addressing the underlying causes of health problems.
The commission recommends comprehensive and fundamental reform, including strong incentives and techniques to control total health system costs, encourage healthy behaviors, enhance the efficient delivery of health services, promote prudent use of services by consumers, and equitably distribute financing.
Summary of Amended Bill:
ADMINISTRATIVE STRUCTURE
The Commission
The Washington Health Services Commission (WHSC) is created consisting of five full-time members appointed by the governor with the consent of the Senate. The insurance commissioner shall be a non-voting member. The chair will be the chief administrative officer.
The primary powers of the commission are to: endeavor to ensure access to health care for all residents; establish a set of uniform health services, the uniform benefits package (UBP) and several supplemental benefits packages; set the maximum premium for both packages; set individual and employer contribution levels and individual point-of-service cost-sharing levels; determine the lowest price UBP for employers; establish a method of medical risk adjustment; and seek federal waivers from Medicare, Medicaid, ERISA and other laws necessary to implement this bill.
The Insurance Commissioner
In addition to current responsibilities, the insurance commissioner will: sit as a non-voting member of the WHSC; regulate certified health plans (CHPs); establish and regulate health insurance purchasing cooperative (HIPC); and undertake a study of the feasibility of developing a single licensure category for CHPs.
Washington Health Care Authority
New duties of the Health Care Authority are to: administer the Washington State Group Purchasing Association; administer the Basic Health Plan (BHP); purchase health benefits for ferry workers and school district employees --the State Employee Benefit Board (SEBB) becomes the Public Employee Benefits Board (PEBB); become the primary purchasing agent of publicly-funded health services, through designation as the state health services purchasing agent; and administer funds for community and migrant health clinics.
Public Health Governance
Counties are given full responsibility for public health services. The related portion of the motor vehicle excise tax is adjusted accordingly.
MAJOR ACCESS ELEMENTS
The access goal that all residents of Washington State shall receive the uniform benefits packages by July 1, 1998, is established.
A uniform benefits package is established that includes health services that are effective and necessary. The UBP can be expanded as expenditures become under control. The schedule of covered health services shall emphasize proven preventive and primary health care and shall include primary and specialty health services, inpatient and outpatient hospital services, prescription drugs and medications, services necessary for maternity and well-child care, including preventive dental services for children, case managed mental health services, a short-term skilled nursing facility, home health and hospice services, subject to preapproval, and other services deemed necessary by the commission. Several supplemental benefits packages shall be defined by the commission. Only certified health plans can provide the benefits packages.
Long-term care is to be included by 1998, however, a social and health maintenance organization pilot project and long-term care partnership program is added.
State and school employee health benefits would be substantially equivalent to benefits offered on January 1, 1993.
Insuring entities are permitted to offer additional benefits not included in either the UBP or the supplemental packages as may be negotiated in union contracts or other agreements.
The Basic Health Plan (BHP) is modified to enable non-poor individuals to enroll without subsidy. Small businesses with less than 100 employees can enroll their employees if the business pays at least 50 percent of the premium. The premium share of non-wage employees can be subsidized. The subsidized enrollment is expanded. In an effort to maximize federal financial participation, Medicaid eligibles are excluded from the BHP, but will be enrolled in the Medical Assistance Program.
MAJOR COST CONTROL ELEMENTS
The UBP shall be offered only by certified health plans (CHP), which are existing insuring entities, or newly created entities that agree to comply with certain conditions regarding premium limits, package design, enrollment, portability, before billing, and health data. As of July 1995, only CHPs can offer the two types of packages. The two types of packages shall be provided through managed health care systems; fee for service and balance billing are not permitted.
A maximum premium cap is established for the uniform and supplemental benefits packages. The cap can be adjusted by the WHSC upon the recommendation of the insurance commissioner. To promote managed competition, the lowest priced certified health plan shall be determined on a regional basis. Employers and government sponsors are not required to pay more than 95 percent of that price but that amount can be negotiated.
To permit employers and individuals to strengthen their purchasing power, the insurance commissioner is charged with authorizing the creation of 10 health insurance purchasing cooperatives with not less than 100,000 members in distinct geographical regions to receive benefits on a group basis from certified health plans.
The Washington State Group Purchasing Association is established within the Health Care Authority for the purpose of coordinating and enhancing the health care purchasing power of the following groups: private nonprofit human service agencies; in-home long-term care providers; chore services providers; day care centers' operators; and foster parents.
To strengthen the state's purchasing power, the Health Care Authority is designated as the single state health services purchasing agent for the ultimate purpose of placing all state-purchased health services in a community-rated, single pool by July 1, 1997, including: the Basic Health Plan; school employee benefits; the Washington Purchasing Group Association, health services provided by the Department of Corrections, and state employee benefits. Assuming federal waivers, it shall also include the Medical Assistance Program (Medicaid) of the Department of Social and Health Services. Local governments, as in present law, have the option of joining.
MANAGED COMPETITION AND LIMITED ANTI-TRUST IMMUNITY
The Legislature finds that managed competition rather than unrestrained competition will produce a more efficient and cost effective health care market. A comprehensive system of oversight of health care markets is established to govern the conduct of health care providers, facilities, and certified health plans.
The insurance commissioner is directed to adopt rules requiring certified health plans to publish general criteria for selection of health care providers. Certified health plans need not reveal proprietary criteria but such unpublished criteria cannot be used to terminate a provider under contract with the plan until the provider is informed of the criteria and given an opportunity to conform to the unpublished criteria. The insurance commissioner must also adopt rules requiring provider contracts to contain binding dispute resolution procedures and a process for provider appeal to the plan of a decision to exclude a provider. In addition, whenever the attorney general determines that a certified health plan's market power reaches the point where exclusion of health care providers would result in reduced consumer access to needed health care services, the plan must include all willing and able providers meeting the plan's published criteria for selection of health care providers.
The Legislature intends to permit anti-competitive conduct that furthers the goal of health care reform to the extent that the anti-competitive conduct creates more advantages than disadvantages in the health care market. However, any activity which would constitute a per se violation of anti-trust law is not permitted unless explicitly authorized by the Health Services Commission. Any health care provider, facility, or certified health plan may request that the attorney general issue an informal opinion as to whether the Health Care Reform Act permits certain conduct. If the attorney general determines that the conduct is not permitted, the party may petition the health services commission for permission to engage in the anti-competitive activity. After public hearing and subject to attorney general approval, the commission may authorize the conduct if the commission finds that the health care reform advantages outweigh the competitive disadvantages.
Subject to the approval of the attorney general, the commission must adopt rules: (a) governing conduct among health care providers, facilities, and certified health plans including the use of certain provider contract restrictions; (b) permitting health care providers within the service area of a plan to negotiate the terms and conditions of contracts with certified health plans; and (c) governing the merger of health care facilities. With the assistance of the Attorney General's Office, the commission must actively supervise any anti-competitive conduct authorized and must modify or prohibit authorized conduct whenever the commission determines that such conduct no longer outweighs competitive disadvantages.
The insurance commissioner is directed to report to the Legislature by January 1, 1994, on the merits of creating a new licensing and regulatory code for certified health plans that would place all insurers, health care service contractors, and health maintenance organizations under the same regulatory constraints while encouraging new certified health plan entrants into the health care market.
INDIVIDUAL AND EMPLOYER PARTICIPATION
All residents of the state of Washington are required to enroll in a certified health plan no later than July 1, 1998; individuals are permitted exemptions from this requirement for religious reasons based on constitutional rights.
Employers are required to offer a choice of three certified health plans, including the lowest priced plan, to all of their qualified employees, working more than 80 hours per month, and their dependents and to pay no less than 50 percent and no more than 95 percent of the premium of the lowest cost available certified health plan within their geographic region as determined by the WHSC. For part-time employees, working less than 80 hours per month, an employer contribution will be set based upon a pro-rata formula. Depositories are established to assist in this compilation.
This requirement shall be implemented as follows:
For businesses with greater than 500 employees, employees are to be included by July 1, 1995 and the employees' dependents are to be included by July 1, 1996;
For businesses with greater than 100 employees, employees are to be included by July 1, 1996 and the employees' dependents are to be included by July 1, 1997;
For the remaining businesses, employees are to be included by July 1, 1997 and the employees' dependents are to be included by July 1, 1998.
In lieu of sponsoring coverage for employees and their dependents through direct contracts with certified health plans, an employer may combine the employer contribution with that of the employee's contribution and enroll in the basic health plan or a health insurance purchasing cooperative.
An exemption from purchasing insurance for employees is permitted based upon constitutional religious grounds, however, the employer must make arrangements to transfer the funding to the employee so as to permit enrollment.
WASHINGTON HEALTH SERVICES ACCOUNT
The Washington Health Services Account is established. New revenue in the bill is deposited into the account.
Funds in the account can be used for: Basic Health Plan operation; public health services, such as childhood immunization, teen pregnancy prevention and a media campaign directed at teen risk behaviors; primary care provider recruitment and training; community and migrant health clinics; operation of the Health Services Commission; and operation of the health services data system.
PUBLIC AND LEGISLATIVE PARTICIPATION AND OVERSIGHT
The WHSC must seek input from the public in developing the UBP.
The UBP supplemental packages and the employer participation requirements must be submitted to the Legislature before the effective date; the Legislature can reject them by law.
A stakeholder's committee must be appointed by the WHSC chair composed of representatives of the health industry, business, labor and consumers.
PRACTICE GUIDELINES
The Department of Health is required to establish a process to identify and evaluate practice guidelines and risk management protocols as they are developed by the appropriate professional, scientific, and clinical communities; and recommend the use of practice guidelines and risk management protocols in quality assurance, utilization review, or provider payment to the WHSC.
LIABILITY REFORM
Disciplinary Action
The Department of Health and health care practitioner disciplinary boards are given greater authority to take action against incompetent or unlicensed practitioners through: increased expenditures for investigations and disciplinary actions; and, civil penalties for practicing without a license.
Mandatory Malpractice Insurance
Coverage is mandated for independent health care practitioners whose services are included in the UBP.
Malpractice Reduction
!Risk management training of health services providers is mandated.
!Quality improvement activities are encouraged and given legal protection.
Informal Claims Review
The administrator for the courts will coordinate an effort to develop a system of voluntary informal claims review by medical experts before lawsuits are filed.
Mandatory Mediation
All medical malpractice lawsuits will be subject to mandatory mediation, so that claims can be resolved earlier and more equitably.
Joint and Several Liability
Rules are modified to encourage settlement of malpractice claims.
INTERIM HEALTH INSURANCE
Current insurance practices are modified to: restrict the use of pre-existing conditions limitations; permit coordination of health benefits while retaining cost-sharing features; improve disclosures to people whose policies are cancelled or modified; prohibit cancellation or non-renewal of policies because a person's health deteriorates; and prohibit insurers from offering a new policy to only healthy people for the purpose of isolating unhealthy people in older and subsequently more expensive policies.
REVENUES
Health Care Prepayments Tax
!Applies to Health Maintenance & Health Care Service Contractors (HCSCs)
!Rate: 2 percent of all prepayments for health care services
!Similar to Insurance Premium tax, with same rate
!Insurance companies currently pay Insurance Premiums tax at 2 percent on premium income. Health Maintenance Organizations (HMOs) and HCSCs are exempt from Insurance Premiums tax.
!HMOs and HCSCs now pay B & O tax at 1.5 percent on a portion of gross income.
!Like Insurance Premiums tax, the new Prepayments Tax is in lieu of B & O.
Cigarette and Tobacco Taxes
!8.8 percent surtax on existing taxes
! 3 cents more per pack
! 37 cents per pack total
!Revenue from existing taxes is used for multiple purposes.
Liquor, Wine, & Beer Taxes
!8.8 percent surtax on existing taxes
!Spirits (hard liquor) are taxed on both volume and sales price.
!Beer and wine are taxed on volume.
!Revenue from existing taxes is used for multiple purposes.
Amended Bill Compared to Engrossed Second Substitute Bill: The total state health services budget, trust fund, and related accounts are deleted and replaced with a single health services account in which shall be deposited all of the revenue sources established.
The uniform and supplemental benefit packages are redefined.
The employer participation requirements are expanded to include offering at least a choice of three certified health plans, including the UBP that has proved to be the lowest priced.
Consistent with specific appropriated funds, the Department of Health is required to establish matching grants for multi-cultural health care technical assistance programs.
HIPCs are redefined from two to 10 and explicit directions on their creation and governance is added.
Other major components added are: short term insurance reforms; a social and health maintenance organization pilot project; the Washington State Group Purchasing Association; the insurance commissioner as a non-voting member of the WHSC; and, an employer religious exemption.
Major components deleted are: Medicaid/BHP merger waiver; long-term care joint underwriting agreements; mandatory offering for long-term care insurance; and, B & O small business tax credit.
The UBP and BHP consolidation is set at 1995 instead of 2001.
The amended bill makes numerous technical and corrective changes.
Appropriations: For the 1993-1995 Biennium, from the various accounts within the newly created Washington health services trust account:
$173.9 million for a phased expansion of the Basic Health Plan to an estimated 94,000 additional enrollees with gross family incomes below 200 percent of the federal poverty level by July 1995 and to continue present enrollment levels;
$20 million for immediate improvements in public health programs;
$5 million for expanded primary care through community health centers;
$6.5 million for health data collection and for the operation of the Health Service Commission;
$4 million to the Department of Health for the Health Professional Resource Plan, health professional recruitment and retention programs, the Retired Primary Care Provider Malpractice Insurance Program, training for volunteer medical services personnel, and for required studies;
$2.3 million to the University of Washington for the Family Medicine Program; and
$2 million to the Higher Education Coordinating Board for health professional scholarships.
Revenue: It is estimated that increased taxes on cigarettes, tobacco products, spirits, prepayments for health care received by health maintenance organizations (HMOs), health care service contractors (HCSCs), certified health plans (CHPs), and hospitals will raise $230 million during the 1993-95 biennium, to be deposited in the health services trust account. The effective date of the HMO/HCSC/CHP tax is January 1, 1994, with tax rates of 0.07 percent in calendar year 1994, 0.6 percent in calendar year 1995, 1.0 percent in calendar years 1996 and 1997 and 1.1 percent thereafter. The business and occupation tax on hospitals is made effective July 1, 1993, at a 0.5 percent rate, which increases to 1.5 percent on July 1, 1995. Surtaxes on spirits are 8.8 percent during the 1993-95 biennium, 50 percent during the 1995-97 biennium, and 75 percent during the 1997-99 biennium. These tax rates are estimated to generate some $632.8 million during the 1995-1997 biennium, and $883.4 million during the 1997-1999 biennium.
Fiscal Note: Requested April 1, 1993.
Effective Date of Amended Bill: The bill contains an emergency clause and takes effect immediately except for: sections 201 through 207, 301 through 306, and 311 through 314 which take effect July 1, 1993; sections 307 through 310 take effect January 1, 1995; sections 307 through 310 shall be effective in respect to taxes due March 1, 1996, and thereafter; and sections 231 through 254 of this act shall take effect July 1, 1994.
Testimony For: The bill implements the thoughtfully developed recommendations of the Health Care Commission. It will contain costs using managed competition in which state government is a leader and model by consolidating no less than 20 percent of the health care market in an aggressive effort to forge a better health care bargain for teachers, state employees, low income persons and any other citizen who may wish to participate. The bill offers the same consolidated purchasing advantages within the private sector.
If this is not successful, the bill absolutely controls costs at the level of insurance premiums for a uniform, and relatively comprehensive set of benefits. This is low enough in the system to be effective and yet high enough to be comprehensive and avoid administrative complexity and gaming by providers and others. The bill preserves choice, emphasizes competition, requires cost effective managed care, expands and revitalizes public health, expands access through direct subsidies for the working poor and the unemployed, alleviates the shortage of primary care providers, takes steps to reduce medical malpractice costs and contains other needed reforms.
It is honest in providing a level of funding really needed to implement such a broad package of reforms. It provides the needed funds by taxing items which are known to cause health problems (tobacco and alcohol), and by redistributing funds already flowing into the health care system (premium taxes and hospital taxes). It levels the playing field for all businesses by requiring their participation in financing care for all. It also encourages cost consciousness and individual responsibility by requiring all residents to pay at least a portion of the cost of their care.
Testimony Against: The bill establishes a complex and unworkable regulatory framework in the name of managed competition, and then undermines it with a rigid and unrealistic set of caps on insurance premiums. It establishes a new state agency, diverting precious resources away from needed care. It undermines the private health insurance market by placing the state's Basic Health Plan in direct competition with private carriers.
It could force state employees and teachers to subsidize care for the poor by placing all of these groups in the same community rated risk pool.
Its requirement that self funded employer health benefit plans participate in certified health plans violates federal law. It is unrealistic to think this federal law can be changed. The entire scheme is dependent on obtaining waivers and special exceptions from federal rules and laws that are difficult to obtain.
It adds a total of more than $2 billion in new taxes to a system that most agree is already too expensive. It raises the money largely on the narrow base of smokers and drinkers, who are already economically disadvantaged. Other revenues are added to the health care system itself, further inflating health care costs.
The federal government and the Clinton administration should be and are planning to address health care as a nationwide issue. State-by-state reforms will cause incentives to migrate to states with good plans, will be difficult for multistate businesses to contend with and may have to be scrapped for a national policy when it comes.
Witnesses: Dr. Michael Schlitt and Dr. Glenn Drumheller, Association of American Physicians and Surgeons (con); Red (Norman) Meyer, American Association of Retired Persons (pro); Rick Scriver, Marysville Education Association (con); Billie Jo O'Hagen (con); Tom Hilyard and Cindy Zehnder, Health Care Commission (pro); Bill Waterworth, Dennis Warren and Bill Kyle, Washington Association of Health Underwriters (con); John Scates, John Scates & Company (con); Enid Layes, Association of Washington Business (con); Bruce Murray, Washington Energy (con); Greg Tisdel, TR's Doors (con); Pam MacEwan, Citizen Action (pro); Peter Berliner, Children's Alliance (pro); Lonnie Johns Brown, National Organization for Women (pro); Cheryl Quackenbush, ADAMS (?); Kelly Pearson and Tony Winters, Chiropractors (pro); Frank Morrison, Washington Podiatric Medicine (pro on concept); Dr. Anna Chavelle, Washington State Medical Association; Carol Smith, Attorney General's Office; Barbara Wills, Insurance Agent (con); Dan Penhallegon and Reesa Zuber, Central Washington School Employees Benefit Trust (con); John Gracey, Plymouth Brethren (pro); Grace Popoff and Michael Tsai, Washington Advocates for the Mentally Ill; Symma Winston, Health Challenges (?); Bobette Jones, Preventive Lifestyles (con); Gretchen Mathers, Restaurant Association (con?); Margaret Heldring, Washington State Psychological Association; Chuck Beard and Rob Schneidler, Partners in Change; Carol Horn, Generations United (mixed); Randy Revelle, Committee for Affordable Health Care (pro); Carl Meitzem, United Chambers Plans; Bobbie Berkowitz, Tom Milne and Diana Yu, Local Public Health (pro); Diane Sosne; Lucinda Clark, FPA; Mike Foss and Jan Kennedy, Washington Association of Temp Services (?); Craig Salins, King County Democrats; Marty Butzen, Midwives Association of Washington; Margaret Shepherd, Home Care Association of Washington; Mark Brown and Frances Marshall, Department of Labor & Industries (support); Basil Badley, Health Insurance Association of America; Ken Bertrand and Tom Revis, Group Health; John Kvamme, Washington Association of School Administrators (concerns); Theresa Swick (con as stands); Carl Erickson, Harbor Wholesale Grocery (con); Gary Smith, Independent Business Association; Bill Fritz, Washington Food Processors Council (con); and Stu Halsan, Tobacco Institute (con).
HOUSE COMMITTEE ON REVENUE
Majority Report: Do pass as amended by Committee on Revenue and without amendment by Committee on Health Care. Signed by 11 members: Representatives G. Fisher, Chair; Holm, Vice Chair; Anderson; Brown; Cothern; Leonard; Morris; Romero; Rust; Thibaudeau; and Wang.
Minority Report: Do not pass. Signed by 5 members: Representatives Foreman, Ranking Minority Member; Fuhrman, Assistant Ranking Minority Member; Silver; Talcott; and Van Luven.
Staff: Bob Longman (786-7139).
Summary of Recommendation of Committee on Revenue Compared to Recommendation of Committee on Health Care: The bill, as amended by the Committee on Revenue, contains several provisions relating to taxes, modifies the definition of a full-time employee, and establishes a small business financial assistance program.
Tax Provisions
The tax provisions were modified to be the following:
!Cigarette Tax: Increase by 20 cents per pack in Fiscal Year (FY) 94, 22.5 cents in FY 95, 40 cents in FY 96 and 41 cents for FY 97 and thereafter.
!Tobacco Products Tax: Increase by 10 percentage points to 74.9 percent of the wholesale price.
!HMO, HCSC, and Certified Health Plan Tax: 2 percent tax on premiums or prepayments for health care services to start on January 1, 1996.
!Hospital Tax: Business and occupation tax exemption for nonprofit hospitals is repealed; new tax at 0.5 percent for FY 94 and FY 95, at 1.5 percent for FY 96 and thereafter.
! Liquor Tax - Additional taxes equal to:
10 percent of current rates for FY 94 and FY 95,
15 percent of current rates for FY 96 and FY 97, and
20 percent of current rates for FY 98 and FY 99.
!Beer Tax - Additional tax equal to:
20 percent of current rates for FY 94 and FY 95,
50 percent of current rates for FY 96 and FY 97, and
100 percent of current rates for FY 98 and FY 99. Breweries producing less than 60,000 barrels are exempted from this additional tax.
! Wine Tax - Additional tax equal to:
10 percent of current rates for FY 94 and FY 95,
25 percent of current rates for FY 96 and FY 97, and
50 percent of current rates for FY 98 and FY 99.
Wineries with production less than 1,000,000 gallons per year are exempt from additional tax. The additional tax is phased in for wineries between 1,000,000 and 2,000,000 gallons of production.
Revenue from these additional or modified taxes is placed in the health services account. Revenue for 1993-95 is expected to be $232 million; for 1995-97, $662 million; and for 1997-99, $1,052 million.
'Qualified Employee' Defined and Employee Coverage Modified
The revised bill changes the definition of a qualified employee, one eligible for full employer contributions, from one who works 20 hours per week to one who works 30 hours per week.
The revised bill further requires the employer of a qualified employee to cover that employee's dependent(s) if such dependent(s) is working less than 30 hours per week.
The revised bill establishes a financial assistance program to assist small businesses, with less than 25 employees, in providing employee coverage if such employers meet certain criteria. This financial assistance program takes effect July 1, 1997, as does the small business mandate. Appropriation is limited to $100 million.
Fiscal Note: Available. New fiscal note requested April 6, 1993.
Appropriation: The structure of dedicated accounts is modified to conform with state accounting practices. Four dedicated accounts are created: the health services account, the personal health services account, the public health services account, and the health systems capacity account. A total of $213.7 million is appropriated from the health services account to the other accounts.
Effective Date of Amended Bill: The amended bill contains an emergency clause and takes effect July 1, 1993, except provisions relating to public health financing and governance, which take effect July 1, 1994, and the health care prepayments tax, which takes effect January 1, 1996.
Testimony For: Group Health accepts the tax on prepayments for health care services. Their concern on taxation of prepayment for medicare services has been addressed. They support health care reform.
Testimony Against: The proposed increased tax on liquor is discriminatory and regressive. Underage drinking is at its lowest rate ever and DWI fatalities are down by 22 percent. If we look closely at the proposed tax increases on spirits, Washington will rank 123 percent higher than the current national average. When the federal government increased liquor taxes in 1991, consumption declined, therefore revenue declined. Passage of this bill will mean more border shopping. Washington State grows 80 percent of this nation's hops, which are only used to make beer. This bill is sending the wrong message by so heavily taxing beer. Regarding the tax on cigarettes, we will see a 24 percent decline in taxable sales by 1996. These taxes will create a bootleg industry.
The bill lacks effective cost controls. Provider taxes are more progressive than 'sin' taxes. Regarding competition, the method of payment is under a pre-pay per capita basis, as opposed to fee for services. Employers won't be able to pay for supplemental benefits.
Witnesses: Brian Harris and Frank Warnke, U.S. Distilled Spirits Council (opposed); Jim Halstrom, Joseph E. Seagram and Sons, Inc. (opposed); Jack Quinn, Distillery Representatives Association of Washington (opposed); Gary Smith, Independent Business Association (opposed); Celia Fritz, Anheuser-Busch (opposed); Dick Ducharme, Washington Beer and Wine Wholesalers (opposed); Bill Fritz, Tobacco Institute (opposed); Stu Halsan, Tobacco Institute and Coors Brewing (opposed); Hugh Hendrickson, GHB, Inc. (opposed); June O'Brien, St. Peter Hospital (would support with restoration of employee alcoholism/drug addiction treatment provision in uniform benefits package); Bill Asbury (would support with restoration of employee alcoholism/drug addiction treatment provision in uniform benefits package); Linda Grant, Association of Alcoholism/Addiction Programs (would support with restoration of employee alcoholism/drug addiction treatment provision in uniform benefits package); Sharon Foster, Wine Institute (opposed); Ken Bertrand, Group Health (supports it, but notes need for some policy review); Carl R. Erickson, Harbor Wholesale Grocery (opposed); Ilkwon Moon, Korean Grocers Association (opposed); Steve Wehrly, Miller Beer (opposed); Tom Parker, National Association of Self-Employed (opposed); Enid Layes, Association of Washington Business (opposed); T.K Bentler, Micro-Breweries Association (supports with provision exempting micro-breweries); and Carolyn Logue, National Federation of Independent Businesses (opposed).