AN ACT Relating to health care; amending RCW 28A.58.0951 and 28A.58.420; adding new sections to chapter 41.05 RCW; creating a new section; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature recognizes the rising costs of health insurance premiums for school employees, and the increasing need to ensure effective use of state benefit dollars to obtain basic coverage for employees and their dependents. In school districts that do not pool benefit allocations among employees, increases in premium rates create particular hardships for employees with families. For many of these employees, the increases translate directly into larger payroll deductions simply to maintain basic benefits.

The goal of this act is to provide access for school employees to basic coverage, including coverage for dependents, while minimizing employees' out-of-pocket premium costs. Unnecessary utilization of medical services can contribute to rising health insurance costs. Therefore, the legislature intends to encourage plans that promote appropriate utilization without creating major barriers to access to care. The legislature also intends that school districts pool state benefit allocations so as to eliminate major differences in out-of-pocket premium expenses for employees who do and do not need coverage for dependents.

Sec. 2. Section 205, chapter 2, Laws of 1987 1st ex. sess. and RCW 28A.58.0951 are each amended to read as follows:

(1) Every school district board of directors shall fix, alter, allow, and order paid salaries and compensation for all district employees in conformance with this section.

(2)(a) Salaries for certificated instructional staff shall not be less than the salary provided in the appropriations act in the state-wide salary allocation schedule for an employee with a baccalaureate degree and zero years of service; and

(b) Salaries for certificated instructional staff with a masters degree shall not be less than the salary provided in the appropriations act in the state-wide salary allocation schedule for an employee with a masters degree and zero years of service;

(3)(a) The actual average salary paid to basic education certificated instructional staff shall not exceed the district's average basic education certificated instructional staff salary used for the state basic education allocations for that school year as determined pursuant to RCW 28A.41.112.

(b) Fringe benefit contributions for basic education certificated instructional staff shall be included as salary under (a) of this subsection to the extent that the district's actual average benefit contribution exceeds the greater of: (i) The formula amount for insurance benefits provided per certificated instructional staff unit in the state operating appropriations act in effect at the time the compensation is payable; or (ii) the actual average amount provided by the school district in the 1986-87 school year. For purposes of this section, fringe benefits shall not include payment for unused leave for illness or injury under RCW 28A.58.096, or employer contributions for old age survivors insurance, workers' compensation, unemployment compensation, and retirement benefits under the Washington state retirement system.

(c) Salary and benefits for certificated instructional staff in programs other than basic education shall be consistent with the salary and benefits paid to certificated instructional staff in the basic education program.

(4) Salaries and benefits for certificated instructional staff may exceed the limitations in subsection (3) of this section only by separate contract for additional time, additional responsibilities, or incentives. Supplemental contracts shall not cause the state to incur any present or future funding obligation. Supplemental contracts shall be subject to the collective bargaining provisions of chapter 41.59 RCW and the provisions of RCW 28A.67.074, shall not exceed one year, and if not renewed shall not constitute adverse change in accordance with RCW 28A.58.450 through 28A.58.515. No district may enter into a supplemental contract under this subsection for the provision of services which are a part of the basic education program required by Article IX, section 3 of the state Constitution.

(5) Employee benefit plans offered by any district shall comply with RCW 28A.58.420 and sections 5 through 7 of this act.

Sec. 3. Section 28A.58.420, chapter 223, Laws of 1969 ex. sess. as last amended by section 16, chapter 107, Laws of 1988 and RCW 28A.58.420 are each amended to read as follows:

(1) The board of directors of any of the state's school districts may make available liability, life, health, health care, accident, disability and salary protection or insurance or any one of, or a combination of the enumerated types of insurance, or any other type of insurance or protection, for the members of the boards of directors, the students, and employees of the school district, and their dependents. Such coverage may be provided by contracts with private carriers, with the state health care authority after July 1, 1990, pursuant to the approval of the authority administrator, or through self-insurance or self-funding pursuant to chapter 48.62 RCW, or in any other manner authorized by law.

(2) Whenever funds ((~~shall be~~)) are available for these purposes the board of directors of the school district may contribute all or a part of the cost of such protection or insurance for the employees of their respective school districts and their dependents. The premiums on such liability insurance shall be borne by the school district.

After October 1, 1990, school districts may not contribute to any employee protection or insurance other than liability insurance unless the district's employee benefit plan conforms to the standards adopted by the Washington state health care authority under sections 5 through 7 of this act. However, school districts may continue payments under contracts with private providers in effect on the effective date of this act, until the contract expires, or unless the contract permits modification to accommodate changes in state law relating to school employee benefits.

(3) For school board members and students, the premiums due on such protection or insurance shall be borne by the assenting school board member or student: PROVIDED, That the school district may contribute all or part of the costs, including the premiums, of life, health, health care, accident or disability insurance which shall be offered to all students participating in interschool activities on the behalf of or as representative of their school or school district.

(4) All contracts for insurance or protection written to take advantage of the provisions of this section shall provide that the beneficiaries of such contracts may utilize on an equal participation basis the services of those practitioners licensed pursuant to chapters 18.22, 18.25, 18.53, 18.57, and 18.71 RCW.

NEW SECTION. Sec. 4. Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 5 through 7 of this act.

(1) "School district employee benefit plan" means the overall plan used by the district for distributing fringe benefit subsidies to employees, including the method of determining employee coverage and the amount of employer contributions, as well as the characteristics of benefit providers and the specific coverage offered. The standards adopted under section 5 of this act shall not apply to coverage for which there is no district cost or contribution.

(2) "Fringe benefit" does not include liability coverage, old-age survivors' insurance, workers' compensation, unemployment compensation, retirement benefits under the Washington state retirement system, or payment for unused leave for illness or injury under RCW 28A.58.096.

NEW SECTION. Sec. 5. (1) The Washington state health care authority shall adopt and implement standards for school district employee benefit plans under this section. The standards shall be implemented in three phases, as follows:

(a) The first phase shall be the development and adoption of a preliminary set of standards under section 6 of this act for benefit plans offered in the 1990-91 school year. The health care authority shall adopt rules by May 1, 1990, to implement these preliminary standards.

(b) The second phase shall include the adoption of additional standards that could not be developed or implemented for the 1990-91 school year due to impractical timelines or inadequate information. It shall also include development and adoption of standards to address the additional issues identified in section 7 of this act. By January 15, 1991, the health care authority shall submit recommendations to the appropriations committee of the house of representatives and the ways and means committee of the senate proposing revised or expanded standards for benefit plans offered in the 1991-92 school year and thereafter. Prior to April 15, 1991, the health care authority shall adopt rules to implement standards for benefit plans offered in the 1991-92 school year.

(c) The third phase shall include ongoing monitoring of school employee benefit issues, research, analysis of data including demographic information on plan subscribers, development of recommended state policies, and annual review and revision of standards for school district benefit plans. Revisions to the standards under subsections (1) through (6) of this section shall be adopted by rule by April 15th prior to the school year for which the revisions will be implemented.

(2) Any contract for employee benefits executed after the effective date of this act between a school district and a benefit provider shall be null and void unless it contains an agreement to abide by the standards adopted by the health care authority including standards that are modified during the term of the contract.

(3) The health care authority shall adopt rules to monitor school district compliance with the standards for school district employee benefit plans adopted under this section. These rules shall include requirements that school districts submit summary descriptions of all benefits offered under the district's employee benefit plan, and other information as may be needed to determine compliance with the adopted standards, in a format and according to a schedule established by the health care authority. The rules shall also require that school districts report demographic data to the health care authority on each covered employee, including but not limited to the number of dependents, and the age and sex of the employee and each dependent.

(4) The health care authority shall review benefit plans submitted by school districts for compliance with the standards adopted for plans offered during that school year. If the health care authority determines that a district has not met the standards or reporting requirements established under this section, the health care authority shall notify the district of the reasons and of procedures for appeal, and shall notify the state auditor.

(5) The rules adopted under subsection (3) of this section shall include a process for administrative appeals by the district before the health care authority if the authority finds that the district has not complied with the standards or procedures established under this section.

(6) This section shall not apply to benefit plans offered in the 1989-90 school year.

NEW SECTION. Sec. 6. (1) The standards adopted by the health care authority for school district employee benefit plans to be offered by school districts in the 1990-91 school year and thereafter shall, except as provided in this section, authorize employer fringe benefit contributions only for basic benefits, which shall be limited to medical, dental, vision, group term life, and group long-term disability insurance.

(2) The health care authority may adopt by rule standards for 1990-91 benefit plans that include incentives for subscribers to avoid overutilization of health care services, such as deductibles, co-insurance payments, or other cost-sharing provisions. The health care authority rules may also include standards for administrative expenses and loss ratios of provider plans. However, the health care authority shall consider the extent to which such standards can feasibly be implemented for the 1990-91 school year, with adequate time for providers and school districts to respond to new state requirements and for employees to review benefit choices. The standards are not intended to create significant disruptions in employees' access to basic benefits.

(3) The standards for school district employee benefit plans under this section and section 7 of this act are not intended to prescribe a single specific plan design. The standards should allow some local flexibility in determining coverage and design of benefits. The health care authority may adopt standards to allow school districts to offer optional benefit plans, in addition to basic benefits, if the district has maximized the pooling of benefit allocations among employees in any bargaining unit or employee group for which the optional benefit plan is offered. Optional benefit plans shall be authorized only if the health care authority determines that offering such options is consistent with the goals of sections 5 through 7 of this act. The standards may not allow plans including employee beneficiary accounts that can be liquidated by the employee on termination of employment. Optional benefit plans may only be offered if, among employees included in the pooling arrangement, employees who enroll dependents in basic medical coverage are charged the same payroll deduction for medical benefits as employees without dependents, and receive the same additional employer contribution for other coverage or optional benefits.

(4) Savings accruing to school districts due to limitations on benefit options under this section shall be pooled and made available by the districts to reduce out-of-pocket premium expenses for employees needing basic coverage for dependents. School districts are not intended to divert state benefit allocations for other purposes.

NEW SECTION. Sec. 7. In developing standards for school employee benefit plans to be offered in the 1991-92 school year and thereafter, the health care authority shall address:

(1) Methods for ensuring equitable pooling of benefits among employees according to the need for coverage, including coverage of dependents;

(2) Giving top priority to using state benefit dollars for basic coverage, with particular emphasis on medical coverage;

(3) Methods of curbing overutilization of benefits through subscriber cost-sharing provisions or other means;

(4) A balance between equity with state employees and local flexibility in plan design;

(5) Options for coverage of part-time employees, taking into consideration patterns of employment unique to school districts and their impact on distribution of benefits;

(6) Collective bargaining between district management and multiple bargaining units on issues of employee benefits;

(7) Financial stability of plan providers; and

(8) Related issues identified by the health care authority and consistent with the goals of sections 5 through 7 of this act.

NEW SECTION. Sec. 8. Sections 4 through 7 of this act are each added to chapter 41.05 RCW.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.