Analysis of the Guaranteed Health Benefits Plan
A major health care reform proposed by Insurance Commissioner Mike
Kreidler
December 2008
Introduction
Washington Insurance Commissioner Mike Kreidler has proposed a universal, state controlled, high-deductible health insurance plan for all Washington residents who are not covered by another government program, such as Medicare and Medicaid.
The plan, called Guaranteed Health Benefits (GHB), is currently being
reviewed and will be formally presented to the legislature at the start of the next
session in January. If passed by the legislature, the public would then vote, most
likely in the fall of 2009, on whether to adopt the plan and put it into effect across
the state.
The details of the proposed plan are still subject to change. As released so far, the basics of the Guaranteed Health Benefits proposal are:
1. All Washington residents would automatically receive catastrophic insurance coverage for health care costs that exceed $10,000 per year.
2. All Washington residents would automatically receive limited preventive care services, including an annual checkup, immunizations, cancer screening and a yearly dental visit.
3. The law would allow residents to buy additional health care coverage at their own expense to cover other routine medical care.
4. All insurance coverage—whether for catastrophic, routine or preventive care—would be provided by private insurance companies.
5. Funding for the plan would come from a new statewide payroll tax.
Under the GHB plan, employees would pay an added 1% tax on their
monthly earnings and employers would pay an additional 3% to 5%, depending on
the total size of their payroll. Actually, however, employees would pay all of the
new tax, because the part paid by the employer would already be figured into the
total cost of retaining each worker on the payroll. In economic terms, the portion
of the tax paid by the employer would otherwise be given to the employee in the form of higher salary.
Proponents also argue that there could be additional budget savings from lower health care costs due to efficiencies created by the program itself.
The initial cost of the program is estimated at $6.5 billion per year, a figure based on the current cost of privately-provided catastrophic insurance in Washington. For comparison purposes, the state’s current annual General Fund budget is about $17 billion per year.
Key Findings
• The Kreidler plan would give all WA residents catastrophic insurance coverage for health care costs that exceed $10,000 per year
• The law would allow residents to buy additional health care coverage at their own expense to cover other routine medical care
• Participation in the plan is mandatory in law and the state defines what benefits are covered
• Funding for the plan would come from a new statewide 3% to 5% payroll tax
• Virtually every state, as well as the federal government, that has attempted a form of mandatory universal coverage has failed
• The Kreidler plan would likely lead to rationing as state managers seek to control costs
