SENATE BILL REPORT

SB 5445

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by Senate Committee On:

Health & Long-Term Care, February 21, 2011

Title: An act relating to the creation of a health benefit exchange.

Brief Description: Establishing a health benefit exchange.

Sponsors: Senators Keiser, Pflug, White, Conway and Kline; by request of Governor Gregoire.

Brief History:

Committee Activity: Health & Long-Term Care: 2/03/11, 2/07/11, 2/21/11 [DPS-WM, DNP, w/oRec].

SENATE COMMITTEE ON HEALTH & LONG-TERM CARE

Majority Report: That Substitute Senate Bill No. 5445 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.

Signed by Senators Keiser, Chair; Conway, Vice Chair; Becker, Ranking Minority Member; Kline, Murray, Pflug and Pridemore.

Minority Report: Do not pass.

Signed by Senator Carrell.

Minority Report: That it be referred without recommendation.

Signed by Senator Parlette.

Staff: Mich'l Needham (786-7442)

Background: The federal Patient Protection and Affordable Care Act (PPACA), passed in March 2010, requires states to establish health insurance exchanges (Exchange) by January 1, 2014, to facilitate the purchase of individual insurance and small employer group insurance, and provide access to premium tax credits and cost-sharing reductions for individuals with family incomes between 133 percent and 400 percent of the Federal Poverty Level (FPL). Individuals with income below 133 percent will have access to expanded Medicaid programs. The federal subsidies for individuals will only be available through the Exchange, or through a federal Basic Health option that states may choose to have available for individuals with family income between 133 percent and 200 percent of the FPL.

The Exchanges are responsible for a number of functions or services, including:

Exchanges may be administered by public agencies, private nonprofit entities, or some combination. States have a number of policy decisions about the structure and focus of the Exchange, and must demonstrate good progress toward development of an Exchange by January 1, 2013, as certified by the federal Department of Health and Human Services (HHS). HHS has made grant funding available to all states to help with the research and planning, and has recently announced the availability of additional grant opportunities to fund the development and implementation. HHS will establish an Exchange for residents and small employer groups in states that choose not to establish their own Exchange.

Summary of Bill (Recommended Substitute): The state must establish an Exchange consistent with PPACA intending to:

The Health Benefit Exchange Board (Board) is created as a nonprofit, public-private partnership consisting of nine members. By September 1, 2011, the Governor must appoint representatives of the following groups: two employee benefits specialists, a health economist or actuary, small businesses, health care consumer advocates, the administrator of the HCA, the Insurance Commissioner or designee as non-voting, and two appointments from a list of recommendations submitted by each legislative chamber, with mutually agreed on names from each caucus.

By December 1, 2011, the Board and HCA, in consultation with the Joint Select Committee on Health Reform Implementation, must develop a broad range of options for establishing and implementing a state-administered health benefit exchange. The options must develop a broad range of options for establishing and implementing a state-administered health benefit exchange. The options must include analysis and recommendations on the array of policy choices and design features for the Exchange, including:

The Board must consult with the Joint Select Committee, the Office of the Insurance Commissioner, and stakeholders including consumers, health insurance carriers, producers and navigators, small businesses, employees, publicly subsidized health care programs, actuaries, and others.

EFFECT OF CHANGES MADE BY HEALTH & LONG-TERM CARE COMMITTEE (Recommended Substitute):

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Original Bill: PRO: We feel this is the best next step in maintaining progress toward development of an Exchange, helping us get it done right and get it done on time. We anticipate this is the first step of a three-step process to design the program and identify the legislative changes to implementation. We endorse the creation of a robust development board that allows different people than we might want for a governance board. The principles captured are the right principles. It is important to maintain local state control of the development of an Exchange. We suggest the Board may need additional representatives of small business, labor and others, and should include a no conflict of interest clause for board members, and the role of stakeholders should be more clearly articulated. The intent should more clearly direct the Exchange to be an active purchaser and it should be more clear that the state should develop one administrative entity to serve both the individual and small group markets. We suggest it should be a governance board not a development board and there should be more discussion about where it is housed. It appears it is house at the HCA. The bill should indicate where recommendations go and the next steps. We would like the option to purchase a public option through the Exchange. The Board should be subject to the open public meetings act to ensure transparency. The Board appointment process should be modified to allow a model more like the WSHIP Board. We support the offering of the federal Basic Health option and would like it to be administered by the Medicaid agency with similar or identical benefits to ensure seamless transitions.

CON: There is no need to work on this now and we should continue discussions through the Joint Select Committee which offers a bipartisan forum with broader perspectives than can be captured through a board. We should not spend the money now to develop this – let the federal government do it. The federal requirements are not out yet. It is a moving target to chase and we should let the federal government do it.

Persons Testifying: PRO: Jonathan Seib, Governor's Office; Molly Voris, Health Care Authority; Karen Merrikin, Group Health; Misha Werschkul, SEIU 775; Jennifer Alan, Healthy Washington Coalition; David Knutson, United Health Care; Molly Moon Neitzel, Molly Moon Ice Cream, Main Street Alliance; Sofia Aragon, Washington State Nurses Association; Mike Tucker, AARP; John Paul, Washington Community Action Network; Teresa Mosqueda, Washington State Labor Council; Molly Belozer Firth, Community Health Plan, Community Health Network of Washington.

CON: Patrick Connor, National Federation of Independent Business; Gary Smith, Independent Business Association.