HOUSE 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

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (11)

     Signed by Representatives Braddock, Chair; Day, Vice Chair; Bristow, Brooks, Bumgarner, Cantwell, Lewis, Lux, D. Sommers, Sprenkle and Vekich.

House Staff:Bill Hagens (786-7131)

Rereferred House Committee on Ways & Means

Majority Report:     The second substitute bill be substituted therefor and the second substitute bill do pass.  (21)

     Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Allen, Appelwick, Basich, Belcher, Braddock, Brekke, Ebersole, Hine, Locke, McMullen, Niemi, Peery, Rust, Sayan, H. Sommers, Sprenkle, Taylor, Valle and Winsley.

Minority Report:     Do not pass.  (8)

     Signed by Representatives Fuhrman, Holland, McLean, Nealey, Schoon, Silver, L. Smith and B. Williams.

House Staff:    Dave Knutson (786-7146)

AS PASSED HOUSE MARCH 13, 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 June 30, 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:  premiums not to exceed $10 per family per month, regardless of income; 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.

The benefit package is based upon the recommendations of the commission and assume (except for the coinsurance site), no dental care, nominal co-payments of $10 per office visit, $5 drugs, and $25 inappropriate emergency room use, and discount from the traditional fee for service system of 25 percent.  The schedule of service includes physician services, inpatient and outpatient hospital services, and other services that may be necessary for basic health care.  It emphasizes preventive and primary health care, and includes all services necessary for prenatal, postnatal, and well-child care.

A grant program is established for regional hospitals that 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.

EFFECT OF SENATE AMENDMENT(S):  The Washington Basic Health Care Plan Administrator is replaced by an administrative board composed of five members appointed by the governor.  The board would thus appoint an executive director, subject to approval of the governor.

The termination date of July 1, 1990 is deleted and replaced with a 1992 sunset review, requiring a Legislative Budget Committee performance audit.

The provision that would preclude pre-existing conditions criteria is deleted.

The bill is amended to require that sites in the five congressional districts be in discrete geographic areas.  The requirement that at least one site use the case management/coinsurance approach is deleted.

Language is added to require that all discounts negotiated by the board must be cost justified as set forth by the Hospital Commission.

A provision is added to require that the board comment on the viability of rural hospitals in its annual report.  DSHS is required to study this issue and report to the legislature by January 1, 1989.

The amendment deletes provisions relating to :  prenatal care; the SOBRA pregnant women option; managed medicaid expansion requirements; and the state health care purchasing provisions.

Fiscal Note:    Requested March 7, 1987.

House Committee ‑ Testified For:     (Health Care)  Robert Ball, Washington Nurses Association; Jane Beyer, Washington Health Care Project Commission; Julie Boden-Schmidt, Washington State Primary Care Association; Jim Crowder, Food Connection; Robert Crittenden, Washington Health Care Project Commission; Bill Dowling; Bruce Ferguson, Washington Health Care Project Commission; Ann Fitzpatrick, Food Connection; Joan Gaumer, Blue Cross; Bill Hobson; Susan Johnson, Service Employees Union; Ron Kero, Department of Social and Health Services; Robert LaRoche; Rory Link, South East Seattle Advocates for Health; Dee Long, Food Connection; Cindy Madden, Washington Health Care Project Commission; Jim Peterson; Gary Smith, Business Association; Sharon Stephenson, Community Health Care Delivery System; Mel Sorenson, Washington Physician's Service; Thao Tat, Washington State Medical Association; Tom Troy, Washington Hospital Association; David Tulasopo, Samoan Community Center and Gail Warden, Committee for Affordable Health Care.

(Ways & Means) Gerald Reilly, Department of Social and Health Services; Jane Bayer, Puget Sound Legal Assistance; Lonnie Johns-Brown, National Organization for Women; Glen Goldstein, Hospital and Health Care Employees Union; and Susan Johnson.

House Committee - Testified Against: (Health Care)  None Presented.

(Ways & Means) None Presented.

House Committee - Testimony For:     (Health Care)  The problem relating to health care access and hospital charity care are growing and must be addressed through public policy.

(Ways & Means) Same as for Health Care.

House Committee - Testimony Against: (Health Care)  None Presented.

(Ways & Means) None Presented.

VOTE ON FINAL PASSAGE:

     Yeas 83; Nays 10; Excused 5

Voting Nay:     Representatives Ballard, Belcher, Cooper, Fuhrman, Grant, Heavey, McLean, Nealey, Padden and J. Williams

Excused:   Representatives Basich, Bumgarner, Chandler, Hankins and Sayan