SENATE BILL REPORT

E2SHB 477

BYHouse Committee on Ways & Means (originally sponsored by Representatives J. King, Brooks, McMullen, Crane, Appelwick, Brekke, Lux, Locke, Grimm, Wang, Unsoeld, Jacobsen, Moyer, Leonard, Sprenkle and Todd)

Enacting the health care access act of 1987.

House Committe on Health Care

Rereferred House Committee on Ways & Means

Senate Committee on Ways & Means

Senate Hearing Date(s):February 16, 1987; March 24, 1987; March 26, 1987

Majority Report:  Do pass as amended.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Bauer, Deccio, Fleming, Kreidler, Moore, Owen, Rinehart, Talmadge, Vognild, Warnke, Williams, Wojahn, Zimmerman.

Senate Staff:Featherstone Reid (786-7411)

                  March 30, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 26, 1987

BACKGROUND:

The purpose of this measure is to establish a basic health care plan for persons who reside in the state of Washington, who are under the age of 65 years, and who do not have health care coverage.

After three unsuccessful attempts to adopt a plan to meet the health needs of persons without coverage, the Legislature created the Washington Health Project Commission composed of legislators and private members in 1986.  The Commission's major responsibility was to identify and describe the number of uninsured in the state, propose approaches to meet this need, and ways to fund the cost.  The Commission submitted its report to the Legislature on December 1, 1986.  Substitute House Bill 477 is generally based on the results of that report.

As set forth in the Commission's report, a significant segment of this state's population does not have access to affordable health care insurance or other coverage.  This group not only includes the unemployed and injured workers who often have lost access to health insurance in the workplace, but also an increasing number of employed individuals who do not have access to health care coverage through their employer.  When these individuals need health care badly enough, they often appear in hospital emergency rooms or in the offices of other health care providers and in many instances receive care at the expense of other consumers and their third-party payers.

The Commission estimated there are 720,000 persons under the age of 65 in Washington without any health insurance; the uninsured are largely young (37 percent are children, and half are under age 25), white (90 percent), and employed (41 percent are employed full time, an additional 14 percent work part time).  Of that total, some 410,000 have gross family incomes below 200 percent of the federal poverty level.  A telephone survey conducted for the Commission established that low-income individuals are highly interested in a state-sponsored basic health plan that covers ambulatory, hospital and emergency care:  nearly 90 percent indicated willingness to enroll (which, according to the empirical literature, suggests that 40 percent would actually enroll), and of those, 96 percent could pay an average of $28 per household per month for such coverage.

SUMMARY:

The Washington Basic Health Plan is established as an independent agency, governed by an administrator appointed by the Governor, with the consent of the Senate.  The Basic Health Plan Trust Account in the State Treasury as the depository for plan funds.  A maximum of seven exempt staff positions are provided, including an administrator and medical director.  The administrator shall appoint at least one technical support committee.

The administrator is required to design a schedule of basic health care benefits and include a separate schedule and payment structure for those eligible individuals who choose to enroll only their dependent children, age 18 and under.

The plan may, after July 1, 1988, enroll up to 30,000 individuals eligible for subsidies who:  (1) are all under the age of 65; (2) are residents of an area served by the plan; (3) have gross family income not exceeding 200 percent of the federal poverty level; (4) choose to obtain basic health care coverage from a particular managed health care system participating in the plan; and (5) remain current in payment of premiums that are based upon a sliding scale established by the administrator.  The plan shall terminate on July 1, 1990, unless continued by legislation.  It is the intent of the legislation that the plan be offered in sites in at least five congressional districts.

At least one site shall be a case management/coinsurance site, and designed as follows:  nominal premiums; a fee for service schedule; a coinsurance schedule based upon specific procedures and ability of enrollees to pay; and a patient/doctor relationship that maximizes patient involvement in health care decision-making, whereby the patient is aware of the incentives and disincentives of utilization.  One site shall serve a rural area and may have a direct contract option with providers.

The administrator is required to establish a structure of periodic premiums from enrollees that is based upon gross family income.  The administrator is also required to establish a system of nominal co-payments and coinsurance schedules to discourage inappropriate utilization of services, that would be due participating managed health care systems from enrollees.  The rates negotiated by the administrator with participating managed health care systems for the actual delivery of basic health care services to enrollees will be subsidized from appropriations made available from the Basic Health Plan Trust Account.  Only those enrollees below 200 percent of poverty are eligible for any subsidy.  Enrollees may continue in the plan if their income rises above 200 percent of poverty, but they must then pay full premiums and no funds from the Trust Account can be used to subsidize their costs.  An enrollee with gross income above 200 percent of poverty for six consecutive months would no longer be eligible for the program.

The administrator is required to solicit participation agreements from managed health care systems and a standard procedure is established for the administrator to negotiate such agreements.  The administrator is to consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among different areas of the state.  The administrator is expected to seek multiple participation agreements so that any enrollee will be allowed a choice between two or more managed health care systems.

A managed health care system (MHCS) is defined as any organization of health care providers that agree to deliver, directly or by contract, the schedule of basic health care services defined by the administrator.  This could include well known health maintenance organizations already active in the delivery of health care and, conceptually, any group of health care providers. Participating systems may not discriminate on the basis of health status, sex, race, ethnicity, or religion.  MHCS's may only offer coverage that is established by the plan.

The administrator is required to adopt a schedule for the orderly development of the delivery of services and availability of the plan to residents of the state.

The administrator may contract with public or private agencies, including health care service contractors, for administrative services necessary for operation of the plan.  The administrator may also contract with such agencies for assistance in benefit design or the monitoring of services rendered under the plan, or for technical and professional assistance to health care providers wishing to form managed health care systems and participate in the plan.

Provision is made for coordination of benefits if any enrollee health care costs may also be covered by other insurance, such as third party coverage of auto accidents.  The administrator is to monitor access that state residents have to necessary health care services and make whatever recommendations he/she deems appropriate to the Legislature.

The Departments of Employment Security, Labor and Industries and Social and Health Services are required to cooperate in the operation of the plan and to help inform any unemployed workers, injured workers and unsuccessful applicants for Department of Social and Health Services medical assistance of the possible availability of the plan.

A grant program is established for regional hospitals that are either tertiary care facilities providing up to 250 percent of the average charity care rate or hospitals having medical assistance charges exceeding 20 percent of the facility's total rate setting revenue from the prior calendar year.  DSHS is directed to seek medicaid matching funds to the maximum extent.

A prenatal program is statutorily created to serve women under 200 percent of the federal poverty level who are not eligible for the categorically needy medical program, and who (after July 1, 1988) are unable to enroll in the Basic Health Plan.

Current statutory provisions that require the state to be a prudent health care purchaser are strengthened.

The deadline that DSHS expand its managed medicaid program is moved from 1991 to 1989.

Fiscal Note:      available

SUMMARY OF PROPOSED SENATE AMENDMENT:

The administrator is replaced by a five member board, appointed by the Governor with the consent of the Senate.  The board will select an executive director, subject to approval by the Governor.

The initial operational sites, selected by the board, are to be "in discrete geographic areas within at least five congressional districts of the state and in such manner as to allow residents of both urban and rural areas access to enrollment in the plan."

It is made explicit that none of the specific recommendations contained in the Report of the Washington Health Care Project Commission are incorporated by reference within the bill.

The provision that would not have allowed the board, in the design of a schedule of health benefits, to adopt a policy on preexisting health conditions is stricken.

Any hospital participating in the program must meet all of the requirements of RCW 70.39.140 (the Hospital Commission statute) in respect to negotiated rates; i.e., that such "rates are cost justified and do not result in any shifting of costs to other payers or purchasers."

A participating managed health care system may "without additional cost" to the plan or enrollee, offer health care benefits or services not included under those adopted by the board.

The Basic Health Plan is made subject to the Sunset Act, terminating June 30, 1992.

All of the additional programs included in the House bill are stricken, with the exception of the matching grant program for regional hospitals.  That program is modified to require any eligible hospital to meet all of the criteria established, unless Federal matching funds are determined to be available.  In that event, any hospital having medical assistance charges exceeding 20 percent of its total rate-setting revenue during the preceding calendar year is eligible.

The bill takes effect immediately.

Appropriation:  $28,000,000 from the basic health plan trust account to the basic health plan board; $3,000,000 General Fund-State, to Department of Social and Health Services; $600,000 to the Basic Health Plan Trust Account.

Fiscal Note:      available

Senate Committee - Testified: Robert Ball, Washington State Nurses Association; Kathy A. Bell, Tacoma; Jane Beyer, Puget Sound Legal Assistance; Julie Boden-Schmidt, Washington State Primary Care Association; Joan Gaumer, Blue Cross of Washington/Alaska; Deirdre Godfrey, Fair Budget Action Campaign; Susan Johnson, Service Employees Union; Rick L. Johnson, M.D. Washington State Medical Association; Russell Keigley, Seattle; Rory Laughery, M.D. Washington Academy of Family Physicians; Gary Smith, Independent Business of Washington; Pat Thibaudeau, Washington Women United; Tom Troy, Washington State Hospital Association; Gail Warden, Committee for Affordable Health Care; Glen and Darlene Whitbeck, Tacoma

Robert Ball, Washington State Nurses Association; Jane Beyer, Puget Sound Legal Assistance, Tacoma; Ed Owens, Olympia; Ann Fitzpatrick, GoodConnection, Tacoma; D. Gibson-Long, Food Connection, Tacoma; Leo Greenawalt, Committee for Affordable Health Care, Seattle; SD. Harry Herdman, Neighborhood Clinic, Tacoma; Lonnie John-Brown, Washington State NOW, Olympia; Rick Johnson, M.D., President, Washington State Medical Association; Joe Schilling, Tacoma; Steve Duncan, Seattle, on behalf of Children's Orthopedic Hospital and Harborview Medical Center