Bipartisan surgery saves health plan

A sweeping health-reform bill that would transform the way many Washington residents buy health insurance has been rescued from the brink of legislative demise.

The top Democrat and the top Republican on the state House Health Care Committee said they will announce a compromise bill today on a new statewide insurance pool. The new bipartisan proposal puts off some of the original bill's most controversial elements, but keeps alive the central feature: requiring some people and businesses to buy their health coverage through a state pool system instead of directly from health insurance companies.

If it were to become law, as many as 300,000 people who now work for small businesses — those with 50 or fewer employees — would begin choosing their own health plans starting next year. Such a deal, whose price tag hasn't been calculated, would be Washington's biggest health-insurance overhaul since 1993, when the state passed a law requiring all businesses to insure their workers and banned insurers from excluding coverage of pre-existing conditions. Many aspects of that 1993 law, including the requirement to insure workers, were eventually reversed before taking effect.

Since then, the ranks of uninsured Washingtonians has only grown. Last year nearly 600,000 residents lacked health coverage; 150,000 of them worked for small businesses. And state legislatures all over the country and the federal government are trying to address similar problems.

Roadblocks encountered

By itself, the proposed Washington insurance pool may not make a big dent in the numbers of uninsured — at least not right away.

The bill does not require small businesses to offer health coverage at all, let alone contribute to the premiums. Workers who buy "preferred" health plans through the pool could qualify for some state subsidies, but funding has not been worked out.

The compromise bill was hammered out by Rep. Eileen Cody, D-West Seattle, who chairs the House Health Care Committee, and Rep. Bill Hinkle of Cle Elum, the committee's ranking Republican. Cody and Hinkle said they will release the details of the revised HB 1569 this morning.

Cody, the bill's main sponsor, has been determined to enact some form of a health-insurance pool this session.

To do that, Cody agreed to severely curtail her original plan, which was modeled loosely after a landmark effort in Massachusetts to extend health coverage to all of the state's uninsured residents.

Originally, Cody proposed an insurance pool, called a "connector," that would cover a million people by 2012, including state and public-school employees, self-employed workers and low-income residents who are currently enrolled in Washington Basic Health Plan, the state-subsidized insurance plan.

But her efforts were hindered by opponents who said the plan would create a needless bureaucracy for people who already have insurance instead of focusing on helping the uninsured.

They also slammed the so-called connector as a "constrictor" that would cut insurance choice and force people to switch coverage without assurance that pool coverage would be cheaper. All of the state's major insurers testified against it.

Pared-back plan

So Cody has agreed to put off until December 2009 a decision by the pool's governing board on whether to add state employees and other groups to the pool.

She also has backed off a proposal to require all adult state residents have health coverage by January 2012. Even the proposed pool's original name, the Health Insurance Connector, has changed to the Insurance Partnership.

Most significantly, small businesses would no longer have to drop their current plans and switch to approved plans through the pool. Instead, all current small-group insurance plans will continue to be sold. Only some of those, however, will be designated as "value plans," qualifying them for state subsidies.

Hinkle called Cody's original plan an experiment "to take over the entire insurance market." But the compromise version, he said, "is a private-sector solution that significantly decreases our risk of damaging what's already working in our system."

Insurers still not pleased

Not all critics are so confident.

Health insurers still insist that the proposal could lead to unintended consequences.

For instance, allowing small-business workers to choose from a range of plans could steer young and healthy people to cheaper, less comprehensive coverage, said Nancy Ellison, director of public policy for Regence BlueShield. That could upend the small-group insurance market, which is designed — and priced — around company employees all joining the same plans.

Ellison said insurers instead support a "more deliberative approach" offered by Gov. Christine Gregoire, who favors covering all uninsured children but wants the state Health Care Authority to study whether an insurance pool would be effective.

Ellison said Washington should wait and watch Massachusetts, where a new law requires most employers to offer coverage and for employees to buy it. But already, she noted, basic coverage through the Massachusetts system is costing a lot more than supporters had hoped.

"Give it a chance"

Cody says she remains hopeful that a Washington insurance pool will help lower premiums by involving more people and boosting insurer competition. She says it would put workers, not their employers, in charge of picking the health plans that are best for them. And some workers could hang on to their coverage even if they switch employers.

The bill "is going to survive," Cody vowed. "We're trying to do it slower so that people won't get anxious and not give it a chance."

In Lakewood, Pierce County, small-business owner Mike Burchett says the state Partnership makes sense: Bigger insurance pools lower costs for everyone in it.

Burchett, who owns an insurance brokerage, currently buys small-group coverage through Costco for his workers. Premiums for him, three employees and their dependents cost $2,700 a month — a 13 percent increase from a year ago.

Burchett says that a state pool would mean far more choices for him and his employees. And it would be no more of a hassle than what they already face.

"I shop every single year" for health coverage, said Burchett, 37. "And the premium goes up every year, too. It never goes down."

"Doing nothing is costing me money every year."

Kyung Song: 206-464-2423 or ksong@seattletimes.com. Seattle Times reporter Ralph Thomas contributed to this story.

Information in this article, originally published March 1, 2007, was corrected March 1, 2007. A previous version of this story incorrectly said that Washington began requiring all businesses to provide health coverage to workers in 1993. The state passed the law that year, but later reversed it before it took effect.