HOUSE BILL REPORT

SSB 6631

BYSenate Committee on Financial Institutions & Insurance (originally sponsored by Senators McCaslin and Smitherman)

Requiring that employers offer an alternative to a dental care assistance plan that limits providers.

House Committe on Financial Institutions & Insurance

Majority Report:  Do pass.  (13)

      Signed by Representatives Zellinsky, Vice Chair; Anderson, Betrozoff, Chandler, Crane, Dellwo, Day, Dorn, Ferguson, P. King, Nutley, Silver and Winsley.

Minority Report:  Do not pass.  (1)

      Signed by Representative Lux, Chair.

House Staff:John Conniff (786-7119)

Rereferred House Committee on Ways & Means

Majority Report:  Do pass.  (24)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Appelwick, Basich, Belcher, Brough, Butterfield, Dellwo, Ebersole, Fuhrman, Grant, Holland, Locke, McLean, Peery, Rust, Sayan, Schoon, H. Sommers, Spanel, Sprenkle, Valle, Wang and Winsley.

House Staff:      Randy Acker (786-7136)

AS PASSED HOUSE MARCH 4, 1988

BACKGROUND:

Recently insurers and health care service contractors (HCSCs) have begun offering dental benefit plans to employers which limit the employees to the use of particular dental care providers.  Under these plans, the insurer or HCSC gives employees a list of dental care providers who have contracted with the insurer or HCSC.  To receive full benefits, employees must use the services of listed providers.

Insurers and HCSCs use these dental plans to reduce health care costs by obtaining favorable prices from dental care providers.

Non-participating dental care providers argue that when an insurer or HCSC establishes these plans, non-participants lose regular clients because the client must use participating providers' service.

The federal Employee Retirement Income Security Act of 1974 (ERISA) preempts any state law which directly or indirectly purports to regulate the terms and conditions of employee benefit plans.  ERISA does not govern government or church employee benefit plans.

Federal courts have consistently ruled that any state law specifically aimed at the terms and conditions of employee benefit plans is preempted by ERISA and can be ignored by the employer.

SUMMARY:

A "dental care assistance plan" is defined as any plan of dental insurance offered by an insurance company or health care service contractor.

Every public and private employer with more than 25 employees that offer its employees a "dental care assistance plan" and every employee benefits fund that offers its members a "dental care assistance plan" which limits benefits to the use of designated providers of dental care must make available another "dental care assistance plan" which permits the employee to use the dental care provider of his or her choice.  The employer must contribute money for the alternative plan in an amount comparable to, but not exceeding, the contribution made for the original plan.  However, ERISA will effectively limit application of this requirement to government and church employee benefit plans.

The alternative dental plan requirements are not mandatory for an employee health care trust qualifying under the federal Taft-Hartley Act (Management Labor Relations Act of 1947.)  However, labor-management trustees may contract with a dental plan if a feasibility study determines that the plan would be to the advantage of employees.

Fiscal Note:      Not Requested.

House Committee ‑ Testified For:    (Financial Institutions & Insurance)  Stuart Bender, Washington Dental Association and Leib Alexander, Washington Dental Association.

(Ways & Means)  None Presented.

House Committee - Testified Against:      (Financial Institutions & Insurance)  Collins Sprague, Association of Washington Business.

(Ways & Means)  None Presented.

House Committee - Testimony For:    (Financial Institutions & Insurance)  Employees should be permitted to choose the dentist of their choice.  Requiring the offering of two plans will permit this freedom of choice without additional cost to the employer; since, an employer is not required to contribute more for an alternative plan than is paid for a restricted access plan.  Even though this requirement is largely preempted by federal law, the Legislature should still adopt the requirement as a necessary first step.

(Ways & Means)  None Presented.

House Committee - Testimony Against:      (Financial Institutions & Insurance)  Requiring the offering of two dental care plans will cost employers more money because of the added burden in administering two plans.  Moreover, small employers will be hurt because of the difficulty in obtaining coverage for small groups.

(Ways & Means)  None Presented.