It deviates from the proclaimed "Public Option," but the WA state legislature has passed a new bill launching a new healthcare program for individuals that puts it in partnership with insurance carriers. Here's what we know so far.
Senate Bill 5526 was originally touted as a Public Option for individual purchasers of healthcare in Washington State. The final approved bill looks much different after multiple rewrites in the House and Senate. The new law does not authorize the state to offer their own healthcare program to individuals, rather, it allows the state to enter into cost-sharing agreements with health insurance companies who then provide the coverage.
Standardized Health Plans
Under the bill, the State Exchange is required to establish up to three standardized individual health plans for each of the bronze, silver, and gold metallic levels. The plans must be designed to, among other things, reduce deductibles, make more services available before the deductible, and provide predictable cost-sharing, all while limiting increases in plan premiums. The Exchange must notify carriers of the standardized 2021 plan designs by January 31, 2020.
The only way to accomplish the goal of bolstering benefits while staving off rate increases will be to limit reimbursements to providers and facilities. This was a hotly debated topic both in the state House and the Senate. Ultimately, they landed on a plan’s maximum reimbursement to providers and facilities, excluding pharmacy benefits, of 160% of Medicare-like Rates (MLR) in the aggregate, with the director of the Health Care Authority being able to waive this cap in some instances. By inserting “aggregate” into the reimbursement cap, carriers will have leeway to pay some providers a lower percentage of MLR while paying others higher levels.
There were two safeguards added to the reimbursement maximum language to ensure adequate payments to certain providers and facilities. Reimbursements for Primary Care Providers (family medicine, general internal medicine, and pediatrics) have a floor of 135% of MLR. Rural hospitals or sole community hospitals cannot be paid less than 101% of allowable costs “as defined by the US Centers for Medicare and Medicaid services.”
Any carrier offering 2021 plans on the Exchange will need to offer at least one standardized silver plan and one standardized gold plan, and if offering a bronze-level plan, they also must offer at least one standardized bronze plan. Alongside these standardized plans, they will be able to offer an unlimited number of nonstandard individual plans. It appears there are at least three carriers interested in partnering with the state on these standardized plans (although that was prior to the final revisions to the bill – their final reactions have yet to be published). The state Health Care Authority (HCA) will have jurisdiction over contracting with carriers.
While the original bill called for providing subsidies to those whose adjusted gross income is less than 500% of the Federal Poverty Level (FPL), the final bill merely tasks the Exchange with developing an implementation and funding plan. They will need to present this plan to the legislature by November 15, 2020. The goal will be to limit individual healthcare premiums to no more than 10% of income.
Initially, this bill would have phased out non-standardized individual plans by 2025. The final bill tasks the Office of the Insurance Commissioner (OIC) with analyzing the impact to Exchange customers if only standardized plans were to be offered on the Exchange beginning in 2025. Their report is due to the legislature by December 1, 2023.
The Bottom Line
In the near term, a number of tasks need to be completed fairly quickly, since carriers will need to file their 2021 individual plans with the OIC by the end of March 2020. On the docket are building standardized plans with consumer input, contracting with carriers to offer the plans, and carrier negotiations with providers and facilities to participate in a lower-payment level network. However, I predict that Cascade Care will look very different by 2025 than the current bill being signed by the Governor. There are implications of this within the final version, with reports being spelled out that will need to be provided to future legislators.
Personally, I would have liked to have seen the legislature mandate that all providers and facilities accept FAIR Health as the maximum level of reimbursement for all individual plans, both inside and outside the Exchange. There wouldn’t need to be any special plans developed, no eventual government take-over of the healthcare system, no hand wringing over whether the providers and facilities would agree to join a new PPO network. Simply using real data to provide the correct level of reimbursement. Carriers can still use FAIR Health as their starting point in negotiations with the carriers, though (hint, hint).
As for the future possibility of state subsidies for those making under 500% of the FPL, there will need to be a funding mechanism. It will be interesting to see how long, and how many legislative sessions, will be throwing this political football down the field. I would rather they fill the holes that the Federal subsidy program created, where families are denied subsidies because of access to an “affordable” employer plan. An employee having affordable employer coverage should not automatically preclude his spouse and children from obtaining subsidies when that employer plan’s dependent rates are unaffordable. Regardless, without finding, state subsidies won't make it to the goal line.
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I love numbers. I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal). I also like to share what I've learned and you'll find it all here.