States Leaning In: Washington Doubles Down on Efforts to Shore up Market, Protect Consumers

Recently, the Commonwealth Fund published scorecards on state health system performance. These tallies, informed in part by CHIR research, evaluate each state on a range of health care metrics, including access to care and income-based health disparities. One of the top-performing states is Washington State, ranked fourth in the country; the state has risen ten spots since the last scorecard came out.

Washington has long been a leader in health insurance reform, implementing policies to strive for universal coverage before the Affordable Care Act’s (ACA) enactment. When the federal law took effect, states had mixed reactions, especially to changes that took place at the state level. And while certain states opposed the ACA, with some refusing to implement the new market reforms, Washington embraced the landmark legislation, expanding Medicaid and running a state-based marketplace. Since the ACA went into effect, 800,000 Washington residents have found coverage through Medicaid expansion and commercial plans.

Fast forward to recent years and Washington is still taking steps to protect and expand access to affordable and comprehensive health insurance. In the wake of federal actions to roll back the ACA’s reforms, states have assumed an even greater role in protecting consumers and ensuring market stability. From strategies to increase insurer competition to protecting consumers when the federal government cut cost-sharing subsidy payments, Washington’s state policymakers have taken up this mantle, and it’s paying off – insurers recently requested the lowest average rate increase in the state marketplace’s history, and two new insurers are entering the market next year.

Since our last post highlighting Washington’s policy playbook, the state has implemented several more policies to preserve their insurance market and bolster consumer protections. Here’s a look at some of the state’s new developments:

Reducing Costs and Improving Access to Comprehensive Coverage

Implementing a Public Option: Last month, Washington enacted legislation to establish a “public option” health plan. Cascade Care, signed into law in May by Governor Jay Inslee, directs the state to contract with private insurers to offer products on the marketplace and caps provider reimbursement to lower premiums by an estimated 5 to 10 percent. Some questions remain about whether insurers and providers will be keen on participating in the program, and the state plans to study potential incentives, such as tying participation in the networks of the state’s public employee and school health benefit programs to participation in the public option plan. The new law also directs the state to develop a plan to provide premium subsidies for consumers with household incomes up to 500 percent of the federal poverty level (FPL). The details of Washington’s public option are still in development, but if it works as intended, the program will improve market competition and provide some premium relief to consumers on the individual market.

Restricting Non-ACA-Compliant Plans: Last year, the Trump administration adopted rules to lower federal guardrails on short-term plans, permitting their sale for a duration of up to a full year, up to three years including renewals. Short-term plans are exempt from many of the ACA’s consumer protections, such as the requirement to provide a minimum set of benefits and the prohibition against charging higher premiums or denying coverage to consumers because of their health status or gender. In addition to the potential harm these products pose to consumers, expanding the availability of short-term plans in this manner sets up an unregulated market to compete with ACA-compliant plans, siphoning away healthy risk. Washington responded to this action by adopting rules to limit short-term plans to three months in a 12-month period and requiring more stringent disclaimer requirements to inform consumers about the numerous limitations of short-term products. Washington also prohibits short-term plan rescissions, or retroactive cancellations, and bars insurers from offering short-term products during the ACA’s annual open enrollment.

Strengthening Consumer Protections

Protecting Consumers from Surprise Medical Bills: In addition to shoring up the individual market, during the most recent legislative session Washington passed a law to protect consumers from “surprise balance billing.” This occurs when providers bill consumers for the portion of out-of-network care that insurers don’t cover, in emergency or other situations when patients cannot reasonably choose between an in-network or out-of-network provider. Many consumers can face astronomically high medical bills as a result. Washington’s new law ensures that consumers seeking emergency care or treatment at an in-network facility are not balance billed for out-of-network care. It also sets up an arbitration process for insurers and providers if they cannot agree on a fair price, so that consumers are held harmless. While federal law prevents Washington from extending its law to self-funded employer plans, Washington’s balance billing legislation is an example of how states can act to protect some if not all consumers from surprise medical bills.

Codifying the ACA’s Protections: A current court case threatens to overturn the ACA in its entirety. In response, a number of states are codifying some of the federal law’s provisions into state law. Washington State did just that, enacting legislation to preserve several of the ACA’s key reforms, including the requirement for insurers to provide coverage regardless of health status, a prohibition on annual and lifetime dollar limits, and outlawing coverage exclusions for pre-existing health conditions. While certain aspects of the law, such as the premium subsidy structure and Medicaid expansion, are difficult to codify without the ACA’s federal funding, Washington has taken an important step to defending the historic law’s reforms at the state level.

Takeaway

The ACA was enacted in part to establish a minimum set of national standards for health insurers, rather than a patchwork of state protections. States like Washington have led efforts to increase access to health insurance that predate the ACA, but the federal standards – and especially the federal funding – transformed the insurance landscape across the country, reducing the uninsured rate to an historic low. Recent federal actions and ongoing litigation have threatened this progress, putting states at the forefront of protecting consumers’ access to coverage and care. Washington serves as an example of the steps that states can take to ensure market stability and retain consumer protections in order to defend the ACA’s gains.

Some of Washington’s policies will not be politically feasible everywhere, and states may want to consider other reforms, such as a reinsurance program or creating a state-level individual mandate with a penalty to replace the federal policies that are no longer in effect. And as the state’s newly minted public option takes shape, many policymakers will want to wait and assess the program’s impact before diving in with their own program. As state policymakers consider ways to expand and preserve access to coverage, lessons from other states, including Washington, will be key to navigating policy decisions and debates.

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