Testimony on SB 6221: Establishing the Washington Health Partnership
Vice President for Research
Our policy analysis of this proposal shows that passage of SB 6221 would represent a massive concentration of power in the hands of 14 individuals appointed by the governor. This is not a public/private partnership, as the bill asserts, since the state would hold all the cards. The results of our analysis are summarized in the following points:
• The 14-member board would choose your plan. The bill creates a supermandate, a standardized, one-size-fits all plan, meaning many people will be forced to buy more health coverage than they want or need.
• This is on top of existing state-imposed mandates which already add 15-20% to the cost of health insurance in Washington.
• The board would choose your co-pays, deductible and out-of-pocket expenses.
• The board would decide what is meant by the undefined “zero premium” plan that is mentioned in the proposal.
• The bill arbitrarily sets a 12% cap on insurers’ administrative expenses, when many such costs themselves are created by state policy and regulations.
• All public employees would have to join the program, subject to collective bargaining. Economic analysis shows that collective bargaining with public sector unions usually increases costs to taxpayers, rather than reducing them.
• Section 17 of the bill would require new, large-scale payroll taxes (called “assessments” in the bill). Employees pay would 2-4% of their Social Security wages, and employers would pay 9-12% of total payroll. However, workers would actually pay the whole tax, including the employer portion, because that is the true cost of employing them. Overall workers will pay up to 16% in payroll taxes under the bill.
• The 16% for a new state payroll tax would come on top of the 15.4% in federal Social Security taxes workers already pay.
• New taxes always suppress investment and job-creation, this consideration is critical at a time the state economy may be entering an economic slow-down or a recession.
• Crowd-out effect – the proposal would reduce choice and drive out competition in Washington’s health care market, because employers would drop their private coverage once they are forced to pay into the state-managed plan.
• The plan would lead to even fewer national insurers willing to do business in our state, in a market that already suffers from lack of choice and competition. Citizens in other states can shop for coverage among dozens of health insurers – Washington has barely a handful of health insurers remaining in the state.
• State agencies are not known for efficient use of public money. As a monopoly, the Health Partnership would lack the competitive incentives of the market to seek efficiencies and streamline costs.
-
This proposal follows efforts at state-run health care in Maine (Dirigo Health), Tennessee (TennCare), and Massachusetts (The Connector). None have met their stated policy goals and have run into program shortfalls and unexpected cost overruns. The same pattern would likely be repeated by a program that attempted state-run health care in Washington.
-
A better alternative: Use the power of the market to give Washington citizens access to affordable health care.
-
Right now state law makes it illegal for people in Washington to buy health insurance in another state, no matter how good a deal that policy might be for them. This prohibition generally does not apply to other types of insurance, like auto, homeowners and life insurance.
-
Today the innovative and fast-moving internet makes access to choice, price competition and product information easier than ever. Dozens of easy-to-use websites provide health coverage information. Examples of consumer-based health insurance websites are:
• eHealthInsurance.com
• HealthQuoteUSA (at nwinc.com)
• HealthInsuranceSort.com (BlueCross)
• HealthInsuranceInfo.net
• HealthInsuranceFinders.com
These websites allow consumers to shop among a wide range of health coverage options, all with varying prices and benefit levels. One site alone (eHealthInsurance) lists at least 215 plans. Washingtonians should be allowed to shop among these plans to find the best coverage at the best price that meets their individual needs.