Washington Hopes to Recover From Failed Reforms

Published June 1, 2004

Before Washington Governor Gary Locke (D) signed HB 2460 in March, the state defined “small group” as any employer group with 1 to 50 employees. That allowed individuals to set themselves up as a single-person business, thus qualifying for small group rates on guaranteed-issue policies, which allowed them to “game the system” by dropping in and out of insurance as it served their purposes. Insurers, required to issue community-rated coverage regardless of the applicant’s health status, were left holding the bag.

To address the situation, HB 2460 redefines a small group as any employer group with 2 to 50 employees, thus establishing a clearly defined market for individual insurance. The move is expected to make the state more attractive to insurers who specialize in the individual market.

Paul Guppy, vice president for research at the Seattle-based Washington Policy Center, agreed the measure would help stabilize the state’s individual insurance market. But he also told Health Care News, “The governor and legislature missed a major opportunity to make health care insurance more affordable for the small group market, and HB 2460 does absolutely nothing to address the high uninsured rate in the state.”

The National Federation of Independent Business (NFIB) also contends the new law falls short. In an April 9 news release, Carolyn Logue, Washington state director for NFIB, noted, “HB 2460 only helps insurance companies and does not provide low-cost health insurance options for small business.”

NFIB has teamed up with the state’s Independent Business Association and the Washington Association of Health Underwriters to launch an initiative campaign, numbered I-895, that will place on the November ballot a referendum allowing insurers to offer a basic health care plan to small businesses free of mandates. The groups had supported an alternative to HB 2460 that passed the state senate in March but failed to pass the state house.

Signatures are currently being gathered for the I-895 ballot initiative. Among other reforms, that measure would give insurers more leeway in community rating, to allow for greater price flexibility, and allow them to provide a variety of plan options. That, says the initiative’s supporters, would allow consumers to purchase plans more closely tailored to their needs.

The initiative also would permit small businesses to purchase the basic health care plans mandated by the state even if they have provided coverage before or if they currently offer better coverage to their employees. This, NFIB notes, “would make the [basic] plans a true safety net for those small businesses who can no longer afford their current coverage and who may drop coverage all together if a less-expensive plan is not available.”

NFIB and policy analysts also recommend the state legislature avoid passing new mandated insurance benefits and embark on a thorough review of existing benefits. Notes NFIB, “only in this broader context can a decision be made about how these mandates are impacting public health and health insurance costs.”

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].

For more information …

on the NFIB ballot initiative and health care reform agenda, visit http://www.nfib.com. Select Washington in the state list, select “Go to the Washington State home page,” and click on Health Care in the NFIB/Washington Agenda list.