BILL REQ. #:  Z-0454.2 

Read first time 01/18/2005.   Referred to Committee on Health Care.

     AN ACT Relating to private participation in public employees' benefits board programs; amending RCW 41.05.011 and 41.05.021; adding a new section to chapter 41.05 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that many employers want to provide comprehensive health benefits to their employees. However, employers, particularly small employers, consistently report that cost is a significant barrier to their offering health insurance coverage to their workers. The high cost of health insurance coverage for small employers is due in part to the costs associated with marketing and administering health benefit plans for small groups. Some of these costs could be avoided by participation in a large purchasing group.
     (2) The legislature intends to expand health benefit plan options available to employers by offering them the opportunity to enroll in programs administered by the health care authority. This option provides employers with the opportunity to benefit from participation in a large purchasing pool that is able to negotiate favorable premium rates and improvements in the quality of health care services provided to enrollees.

Sec. 2   RCW 41.05.011 and 2001 c 165 s 2 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section shall apply throughout this chapter.
     (1) "Administrator" means the administrator of the authority.
     (2) "State purchased health care" or "health care" means medical and health care, pharmaceuticals, and medical equipment purchased with state and federal funds by the department of social and health services, the department of health, the basic health plan, the state health care authority, the department of labor and industries, the department of corrections, the department of veterans affairs, and local school districts.
     (3) "Authority" means the Washington state health care authority.
     (4) "Insuring entity" means an insurer as defined in chapter 48.01 RCW, a health care service contractor as defined in chapter 48.44 RCW, or a health maintenance organization as defined in chapter 48.46 RCW.
     (5) "Flexible benefit plan" means a benefit plan that allows employees to choose the level of health care coverage provided and the amount of employee contributions from among a range of choices offered by the authority.
     (6) "Employee" includes all full-time and career seasonal employees of the state, whether or not covered by civil service; elected and appointed officials of the executive branch of government, including full-time members of boards, commissions, or committees; and includes any or all part-time and temporary employees under the terms and conditions established under this chapter by the authority; justices of the supreme court and judges of the court of appeals and the superior courts; and members of the state legislature or of the legislative authority of any county, city, or town who are elected to office after February 20, 1970. "Employee" also includes: (a) Employees of a county, municipality, or other political subdivision of the state if the legislative authority of the county, municipality, or other political subdivision of the state seeks and receives the approval of the authority to provide any of its insurance programs by contract with the authority, as provided in RCW 41.04.205; (b) employees of employee organizations representing state civil service employees, at the option of each such employee organization, and, effective October 1, 1995, employees of employee organizations currently pooled with employees of school districts for the purpose of purchasing insurance benefits, at the option of each such employee organization; and (c) employees of a school district if the authority agrees to provide any of the school districts' insurance programs by contract with the authority as provided in RCW 28A.400.350. For the purposes of section 3 of this act, "employee" means a person employed by a private employer who seeks and receives the approval of the authority to provide health coverage through its insurance programs.
     (7) "Board" means the public employees' benefits board established under RCW 41.05.055.
     (8) "Retired or disabled school employee" means:
     (a) Persons who separated from employment with a school district or educational service district and are receiving a retirement allowance under chapter 41.32 or 41.40 RCW as of September 30, 1993;
     (b) Persons who separate from employment with a school district or educational service district on or after October 1, 1993, and immediately upon separation receive a retirement allowance under chapter 41.32, 41.35, or 41.40 RCW;
     (c) Persons who separate from employment with a school district or educational service district due to a total and permanent disability, and are eligible to receive a deferred retirement allowance under chapter 41.32, 41.35, or 41.40 RCW.
     (9) "Benefits contribution plan" means a premium only contribution plan, a medical flexible spending arrangement, or a cafeteria plan whereby state and public employees may agree to a contribution to benefit costs which will allow the employee to participate in benefits offered pursuant to 26 U.S.C. Sec. 125 or other sections of the internal revenue code.
     (10) "Salary" means a state employee's monthly salary or wages.
     (11) "Participant" means an individual who fulfills the eligibility and enrollment requirements under the benefits contribution plan.
     (12) "Plan year" means the time period established by the authority.
     (13) "Separated employees" means persons who separate from employment with an employer as defined in:
     (a) RCW 41.32.010(11) on or after July 1, 1996; or
     (b) RCW 41.35.010 on or after September 1, 2000; or
     (c) RCW 41.40.010 on or after March 1, 2002;
and who are at least age fifty-five and have at least ten years of service under the teachers' retirement system plan 3 as defined in RCW 41.32.010(40), the Washington school employees' retirement system plan 3 as defined in RCW 41.35.010, or the public employees' retirement system plan 3 as defined in RCW 41.40.010.
     (14) "Emergency service personnel killed in the line of duty" means law enforcement officers and fire fighters as defined in RCW 41.26.030, and reserve officers and fire fighters as defined in RCW 41.24.010 who die as a result of injuries sustained in the course of employment as determined consistent with Title 51 RCW by the department of labor and industries.
     (15) "Private employer" includes a person, firm, corporation, partnership, association, sole proprietor, or self-employed individual that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar quarter, employed at least two employees, with a normal work week of thirty or more hours, the majority of whom were employed and resided within this state, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer-employee relationship exists.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.05 RCW to read as follows:
     (1) The administrator shall:
     (a) Establish an opportunity for private employers to provide health coverage to themselves and their dependents, and their employees and their employees' dependents, as offered under this chapter;
     (b) Require private employers to submit an application to participate as provided under this chapter; and
     (c) Review and approve or deny applications from private employers to provide health coverage for themselves and their dependents, and their employees and their employees' dependents.
     (2) Amounts paid by a private employer for coverage under this chapter shall include an amount determined by the administrator to pay such administrative expenses of the authority as are necessary to administer plans for covered persons under this section.
     (3) Private employer groups whose applications for coverage are accepted by the authority shall be included in the single community-rated risk pool established under RCW 41.05.022.
     (4) If the administrator at any time determines that the participation of a private employer covered under this chapter adversely impacts insurance rates for state employees, the administrator shall implement limitations on the participation of additional private employers.
     (5) The administrator may design, establish rates for, and implement additional benefit plans exclusively for private employers who enroll under this section.

Sec. 4   RCW 41.05.021 and 2002 c 142 s 1 are each amended to read as follows:
     (1) The Washington state health care authority is created within the executive branch. The authority shall have an administrator appointed by the governor, with the consent of the senate. The administrator shall serve at the pleasure of the governor. The administrator may employ up to seven staff members, who shall be exempt from chapter 41.06 RCW, and any additional staff members as are necessary to administer this chapter. The administrator may delegate any power or duty vested in him or her by this chapter, including authority to make final decisions and enter final orders in hearings conducted under chapter 34.05 RCW. The primary duties of the authority shall be to: Administer state employees' insurance benefits and retired or disabled school employees' insurance benefits; administer the basic health plan pursuant to chapter 70.47 RCW; study state-purchased health care programs in order to maximize cost containment in these programs while ensuring access to quality health care; and implement state initiatives, joint purchasing strategies, and techniques for efficient administration that have potential application to all state-purchased health services. The authority's duties include, but are not limited to, the following:
     (a) To administer health care benefit programs for employees and retired or disabled school employees as specifically authorized in RCW 41.05.065 and in accordance with the methods described in RCW 41.05.075, 41.05.140, and other provisions of this chapter;
     (b) To administer health care benefits programs for private employers as specifically authorized in section 3 of this act in accordance with the methods described in RCW 41.05.075, 41.05.140, and other provisions of this chapter;
     (c) To analyze state-purchased health care programs and to explore options for cost containment and delivery alternatives for those programs that are consistent with the purposes of those programs, including, but not limited to:
     (i) Creation of economic incentives for the persons for whom the state purchases health care to appropriately utilize and purchase health care services, including the development of flexible benefit plans to offset increases in individual financial responsibility;
     (ii) Utilization of provider arrangements that encourage cost containment, including but not limited to prepaid delivery systems, utilization review, and prospective payment methods, and that ensure access to quality care, including assuring reasonable access to local providers, especially for employees residing in rural areas;
     (iii) Coordination of state agency efforts to purchase drugs effectively as provided in RCW 70.14.050;
     (iv) Development of recommendations and methods for purchasing medical equipment and supporting services on a volume discount basis; and
     (v) Development of data systems to obtain utilization data from state-purchased health care programs in order to identify cost centers, utilization patterns, provider and hospital practice patterns, and procedure costs, utilizing the information obtained pursuant to RCW 41.05.031;
     (((c))) (d) To analyze areas of public and private health care interaction;
     (((d))) (e) To provide information and technical and administrative assistance to the board;
     (((e))) (f) To review and approve or deny applications from counties, municipalities, and other political subdivisions of the state to provide state-sponsored insurance or self-insurance programs to their employees in accordance with the provisions of RCW 41.04.205, setting the premium contribution for approved groups as outlined in RCW 41.05.050;
     (((f))) (g) To appoint a health care policy technical advisory committee as required by RCW 41.05.150;
     (((g))) (h) To establish billing procedures and collect funds from school districts and educational service districts under RCW 28A.400.400 in a way that minimizes the administrative burden on districts;
     (((h))) (i) To publish and distribute to nonparticipating school districts and educational service districts by October 1st of each year a description of health care benefit plans available through the authority and the estimated cost if school districts and educational service district employees were enrolled; and
     (((i))) (j) To promulgate and adopt rules consistent with this chapter as described in RCW 41.05.160.
     (2) On and after January 1, 1996, the public employees' benefits board may implement strategies to promote managed competition among employee health benefit plans. Strategies may include but are not limited to:
     (a) Standardizing the benefit package;
     (b) Soliciting competitive bids for the benefit package;
     (c) Limiting the state's contribution to a percent of the lowest priced qualified plan within a geographical area;
     (d) Monitoring the impact of the approach under this subsection with regards to: Efficiencies in health service delivery, cost shifts to subscribers, access to and choice of managed care plans statewide, and quality of health services. The health care authority shall also advise on the value of administering a benchmark employer-managed plan to promote competition among managed care plans.