A Legislative Plan For Universal Health Care Coverage:
The Washington Health Security Trust Proposal

I. One Page Executive Summary: Highlights Of The Proposal

The Problem

Based on the 1992 Washington Health Care Commission Report, econometric consultations we commissioned, and a more recent litany of governmental, news, and anecdotal reports, there is a health care financing crisis in the state of Washington. Health economist Frank Fox estimated total health care spending in Washington for the year 2000 at $20 billion¹. In 2002, Boeing official Bob Watts made the same estimate of $20 billion per year². About 45% of that comes from employment-based health coverage, 40% from existing state and federal government programs, and 15% from out-of-pocket individual payments for premiums, deductibles, co-payments, and noncovered items like prescription drugs.

In spite of this enormous expenditure for health care, more than 600,000 residents of Washington have no health coverage at all. Many others are underinsured or fear they will lose whatever coverage they have. Individual health insurance is increasingly unaffordable or unavailable. Employers are reducing health benefits as insurance rates skyrocket. Costs of the state's health care obligations are increasing much faster than other budget items and are a major cause of the budget deficit. The Basic Health Plan has been forced to reduce enrollment. Doctors and hospitals go out of business, operate at a loss, merge and downsize at a pace never seen before. 80% of surveyed Washington voters and doctors blame the mess on insurers³. However, many insurance companies and HMOs also cannot survive in the present chaotic market environment.

The Washington Health Security Trust Proposal

We propose creating the Washington Health Security Trust, a single public trust fund dedicated to finance a defined set of health services for all state residents. We present our proposal as part of a State-by-State strategy to achieve national universal coverage. Our proposal moves the amount of money now spent on health care from current sources into the trust. The trust can cover health care services for all residents without additional revenue.

Highlights

All residents are covered for defined benefits regardless of health or employment status. Residents choose their providers. Providers and patients make the medical decisions. Doctors and other providers work in the private sector, just as they do now. They are not employees or agents of the trust. Physicians, clinics, hospitals, and other providers negotiate the terms of their participation with the trust. A public board of trustees governs the trust. The initial appointed board, using citizens' and technical advisors, defines the benefits package, establishes a simplified claims processing system, and creates scientifically based tools for monitoring performance. The subsequently elected board of trustees and its advisory committees monitor operations, financial performance, the benefit package, quality of health services, and public satisfaction. They are directed to seek public input for trust policies over time. The initial appointed board is accountable to the governor and the legislature. Once the trust is up and running, elected trustees replace the appointed trustees in an orderly sequence and are directly accountable to the voters in their congressional districts.

How the Trust is Financed

The Washington Health Security Trust is funded by a combination of sources chosen to resemble current health spending patterns and to work with specific limitations and unique provisions of the Washington tax system.

• Employers pay a health security assessment of 10% of payroll above a threshold of $125,000 per quarter.
• Residents 18 and over pay a health security premium of $75 per month (except Medicare enrollees).
• Medicare enrollees pay a premium of $50 per month to add trust benefits beyond their Medicare benefits.
• State funds for health programs are transferred to the trust. Whenever the trust obtains federal waivers, funds for federal health programs will also be transferred to the trust. Until then, federal coverage remains in effect.
• Patients will pay affordable co-payments for outpatient and emergency visits, prescriptions, and long term care.
• Certain exemptions are included for low income families and employers facing financial hardship.
• Employers may purchase private health coverage for their employees. However, the trust benefits package is intended to give employees better coverage than the best current health benefit plans, which now cost employers 12-14% of payroll.
• Pooling the funds for health services across the state and spreading the risk across the entire state population provides a stable mechanism to finance quality care for every resident.

The Health Security Trust is a simple, fair, accountable, and affordable system to fund necessary health care for all residents of the state of Washington.

1. Health Trends, Frank Fox, 1998-2000
2. Watts, Bob, Report from Facing the Future Conference (DSHS), 12/06/2002
3. Elway, Stuart, Elway Research, Inc., WSMA Polls, 1999

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