SENATE BILL REPORT

HB 1990

BYRepresentatives Braddock and Sprenkle

Revising provisions on assessments under the health insurance coverage access act.

House Committe on Health Care

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 23, 1988

Senate Staff:Walt Corneille (786-7416)

AS OF FEBRUARY 22, 1988

BACKGROUND:

The Washington State health insurance pool was created in 1987 to provide health care insurance to persons who are denied adequate health coverage because of poor health or because the cost of available health care would be prohibitive.

The insurers' pool under the high risk health pool does not include employers who self-fund (or self-insure) health benefits for their employees.  Self-funded programs are exempted from pool participation because that type of coverage is governed by the federal Employee Retirement Income Security Act, commonly known as ERISA, which prohibits state regulation.  Self-funded programs are thus not subject to the pool assessment.

A self-funded program is one where the employer bears the risk for the health benefits directly, in lieu of paying a premium or capitation fee to an insuring entity. Nationally, over 30 percent of all companies with less than 500 employees and 70 percent of all companies with more than 10,000 employees self-fund the majority of their health coverage.

Presently, all health insurers, health care services contractors, and health maintenance organizations (HMOs) that do business in the state of Washington are members of the pool.  Any excess in the cost of care for high risk enrollees is assessed against the pool membership on a per capita insuree/enrollee basis.

SUMMARY:

Beginning July 1, 1990 the board of the high risk health pool must assess employers based on the number of full-time-equivalent employees and assess insurers, contractors, and HMOs based on the number of individual health insurance policies issued.  The board is required to define full-time-equivalent employee.

The assessment must be based on:  1) the experience of the pool for the previous year; 2) the pool expenses of administration and incurred losses for the previous year, taking into account investment income and other appropriate gains and losses; and 3) any deficit incurred by the pool during the past year.

For the purpose of the act, "employer" is defined as any public or private entity, including the state and its political subdivisions, which employs one or more employees, and includes sole proprietors.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested February 3, 1988