Washington Insurance Commissioner Mike Kreidler unveiled a bill Monday designed to stabilize the state’s fragile individual health care markets, which proved especially volatile in neighboring rural counties last year.
Insurers made national headlines when they initially pulled out of Grays Harbor and Klickitat counties during last summer’s rate filing period, leaving retirees, part-time workers and self-employed business owners without access to coverage.
Premera Blue Cross later agreed to sell plans in both counties, but the 300,000 people statewide who purchased coverage on the individual market still saw an average premium increase of 36 percent. Out of the state’s 39 counties, nine were left with only one insurer.
In Cowlitz County, the three insurers selling plans were approved for a combined rate increase of 38 percent. In addition, deductibles — the amount patients pay for health services before insurers start to cover costs — increased by a combined average of 43 percent.
Kreidler’s bill, co-sponsored by state Sen. Annette Cleveland (D-Vancouver) and state Rep. Eileen Cody (D-Seattle), aims to increase coverage options while lowering premiums by as much as 10 percent.
As drafted, the plan would assess fees on employer-provided group insurance plans to create a $200 million reinsurance program plan for high-risk patients.
The goal is to place high-cost patients in a separate risk pool, effectively lowering premiums for healthier individuals.
“We’re not going to sit around and wait for the federal government to offer us relief,” Kreidler said at House hearing on the bill Tuesday. “We’ve got to look for ourselves.”
Kreidler has repeatedly lambasted the Trump administration for undermining the Affordable Care Act by halting cost-sharing payments that flowed to low-income patients through insurers.
However, Kreidler warned legislators that the bill is not a silver bullet.
“It will not lower the cost of prescription drugs, restore the individual mandate or provide CSR funding,” he said.
(The Republican-passed tax law repealed the ACA’s requirement for individuals to purchase health insurance.)
Under the legislation, the state would apply for a special waiver that, if approved, would require the federal government to cover a quarter of the program’s cost.
Kreidler said Tuesday that the Legislature needs to move quickly to have the program in place by Jan. 1, 2019.
“We have some very tight timelines we need to meet in order to be successful,” he said.
Alaska, Oregon and Minnesota have all implemented similar reinsurance programs.
The Alaska Legislature, for example, created a $55 million fund for high-risk patients in 2016 after premiums increased 31 percent. The state’s 2017 rate increase was just 7 percent compared to a projected 42 percent increase without the program.
“We all know that a reinsurance program can work,” Kreidler said.
While a handful of interest group representatives expressed support for the idea at Tuesday’s hearing, a number of people opposed the funding mechanism.
“It’s great unless you’re the one who gets stuck paying for it,” said Tom Kwieciak, a lobbyist for the Building Industry Association of Washington.
Kwieciak’s association offers health plans to smaller employers that have banded together to purchase coverage for their workers. Under the proposed law, association health plans would end up footing a significant share of the $200 million price tag.
Patrick Connor, the state director for the National Federation of Independent Businesses, said his group was also concerned that the bill does not prohibit carriers from only offering coverage in the most profitable counties.
“We are here with some very grave reservations about yet another bailout for insurance companies,” he said. “There’s nothing that would require them to offer coverage in less-profitable rural counties.”
Sheela Tallman, a spokeswoman for Premera Blue Cross, said the company supports a statewide reinsurance program but would prefer to see the cost spread beyond health care purchasers.
Kaiser Permanente of Washington Director Melissa Putman concurred, saying her organization favors a funding mechanism that taxes a broad swath of the health care sector.
Regardless of its funding source, the bill could significantly impact how much local residents shell out in monthly premiums next year.
A 40-year-old non-smoker in Cowlitz County purchasing the lowest-cost silver plan on the state’s health care exchange will face an average of monthly premium of $410 this year.
Kreidler said Tuesday that it’s essential for the Legislature to act during its short 60-day session.
“The alternative is dire,” he said.