FINAL BILL REPORT

SHB 2038

                                  C 107 L 88

BYHouse Committee on Ways & Means (originally sponsored by Representatives Sprenkle, Holland, Braddock, Brooks, Peery, Grimm and Locke)

Establishing the Washington state health care authority.

House Committe on Ways & Means

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

Health and other forms of insurance benefits are currently provided to state employees through contracts negotiated by the State Employees Insurance Board (SEIB).  The SEIB is composed of representatives of the governor, higher education faculty and administrators, the director of the Department of Personnel, employee unions and associations, retired persons and the legislature.  Health benefits are provided with no premium contribution by the employee.  The present contracts for health insurance for both the Uniform Plan (Blue Cross) and the Health Maintenance Organizations (HMOs) end June 30, 1988.

SUMMARY:

The Washington state health care authority is created as an independent agency with an administrator appointed by the governor.  The State Employees Benefits Board is established within the authority.  It is charged with the responsibility to design and approve insurance benefit plans for state employees.  The board, to be appointed by the governor, will be composed of three representatives of state employees, three members with experience in health benefit management and cost containment, and the administrator.  The administrator shall serve as chair.

The current State Employees Insurance Board (SEIB) will continue its present functions related to the upcoming health benefits contract to take effect July 1, 1988.  The Office of Financial Management (OFM) will review and approve SEIB actions relating to the contract.  SEIB will be abolished October 1, 1988 and all its staff and functions will transfer to the authority.  After October 1, 1988 the new benefits board will be in place and the authority will assume responsibility for administering the insurance benefit contracts.

The State Employees Benefits Board will design and approve health care plans for state employees to take effect after the upcoming contracts end.  These benefits would be provided through contracts with insurance carriers and Health Maintenance Organizations (HMOs) or through self-insurance.  The contracts shall provide that participants may use equally the services of a variety of providers subject to appropriate utilization controls.  Plans may include methods of maximizing cost containment while ensuring access to quality care.  The authority will provide information and technical assistance to the board.  Premium contributions from employees are authorized upon a vote of five members of the board. The board will assume SEIB's functions relating to the development of plans for the provision of life, liability, accident, disability income and other forms of insurance.

The administrator will establish a bidding process, negotiate and administer the insurance contracts.  Review of utilization and financial data will be required on a quarterly basis.  The act specifies that all claims data shall be the property of the state.

The authority is authorized to utilize self-insurance as a means for providing insurance coverage.  The authority must contract with outside entities for payment of claims and other administrative services.  SEIB is authorized to self-insure the health benefit program for the contract period beginning July 1, 1988.

The authority will develop the technical capacity to review the other state health care purchasing programs and explore options for cost containment and delivery alternatives for these programs.  The authority is to develop data systems to obtain utilization and other forms of data from all state health purchasing programs.  A report is required by December 1, 1990 that reviews the state health purchasing programs and regulatory agencies and makes recommendations regarding coordination between programs and structural changes in the state's current health delivery system.

The authority will analyze the provision of health benefits to K - 12 employees and the cost savings resulting from integration of local school districts into benefit plans offered by the authority and report its findings to the Legislature by December 1, 1989.

A health care policy technical advisory board is established that will provide technical input to the authority regarding data collection and analysis of the state purchased health care programs and effective approaches to cost control, quality and access to health care.  The technical advisory board, appointed by the administrator, will be composed of persons with interest and expertise in health care purchasing, delivery, or research and analysis, and include representatives of the following entities:  private health care purchasers, health care providers, insurance carriers, HMOs, health care service contractors, state agencies that purchase health care, the insurance commissioner and health care consumers.

The insurance premium tax does not apply to premiums paid by the state prior to July 1, 1990 for purchase of medical and dental coverage through the SEIB and the authority.  The Business and Occupation tax does not apply to amounts paid out for covered health services prior to July 1, 1990 by insurance companies under contract to the SEIB or the authority.  These provisions take effect immediately.

The Authority may be established immediately and take necessary steps to ensure that the act can be fully implemented October 1, 1988.  The remainder of the act takes effect October 1, 1988.

VOTES ON FINAL PASSAGE:

      House 59  39

      Senate    26    23(Senate amended)

      House             (House refused to concur)

      Senate    45     4(Senate amended)

      House 59  38(House concurred)

EFFECTIVE:June 9, 1988

            March 16, 1988 (Sections 13, 31-32, Section 36 Sub 1)