What Washington, D.C. Could Learn from Washington State on Health Care Reform

This column first appeared in the July 2010 issue of Inside ALEC, the official magazine of the American Legislative Exchange Council.

In a far away corner of the land, a long time ago, a health care battle took place. The place was Washington state, the year was 1993, and the debate centered on a controversial measure modeled on HillaryCare called the Washington Health Services Act.

Now, from ground zero of HillaryCare, a new movement of consumer-based health care solutions in Washington state has emerged led by a coalition of state lawmakers, the non-partisan Washington Policy Center, and ALEC.

President Bill Clinton recognized early in his first term that his national health care plan needed a state incubator. First Lady Hillary Clinton went on to say “features of the Washington plan will be features of any plan that comes out of Congress.” Washington Governor Mike Lowry reciprocated by emphasizing he was “pleased that President Clinton’s reform proposals so closely resemble Washington state’s new law.”

With pressure from the White House, the legislative process was top-down as bill revisions came across fax machines from Washington, D.C. By the time the final vote was taken, few state lawmakers had actually read the entire bill. The Washington Health Services Act passed on a near party-line vote by a liberal legislature and was signed by the governor in May 1993.

As their policy compass—Hillary-Care—lie in ruins in the other Washington, those responsible for the state legislation were left to nervously watch the implementation of new taxes, bureaucracy, premium caps, insurance regulations, mandatory health insurance coverage, and government-sponsored purchasing cooperatives.

While provisions of the Washington Health Services Act would be phased in over a six-year period, negative effects appeared in the first year. By 1995, many of the state’s private health insurers had pulled out of the market. From 1994 to 1997, the state’s six largest private health insurers lost more than $116 million in the individual market. Those insurers that stayed had to raise premiums—by 40 percent in some instances. Rising costs prompted many consumers to drop their coverage, thus increasing the state’s uninsured rate. By 1999, the individual market had fallen apart—with individuals and families in 30 of Washington’s 39 counties not having any private health insurance options.

Washington state also became a magnet for patients from around the country who had serious and expensive medical conditions because they knew they could get immediate health insurance coverage. Many people took advantage of the new system in other ways. For example, some women would enroll in a health insurance plan after becoming pregnant and drop their coverage following the births of their babies. People would also change from a low-cost health insurance plan with a high deductible to a high-coverage health insurance plan with a low deductible, receive major medical procedures or treatments, and then change back or drop their coverage.

The Washington Health Services Act led to rising health care costs and fewer options for consumers. These outcomes were generated by the legislation’s centralized financing and delivery of health care, including the rationing of health
care, limiting consumer choices for doctors, and consumers paying for coverage they did not need or necessarily want.

The health care issue was on the minds of Washington state voters in the 1994 general election. The state House of Representatives went from 65 Democrats and 33 Republicans to 61 Republicans and 37 Democrats. The Democratic majority in the state senate was downsized to just one seat. Post-election analysis revealed that as voters learned more about the radical health care changes made by their citizens’ legislature, the greater their opposition grew.

While many provisions of the Washington Health Services Act were repealed in 1995, remaining issues caused private health insurers to leave the state. The state went from having 19 private health insurers in 1993, to only having three remaining today. The aftermath continues to hurt families, individuals and small businesses.

The story of Washington state should serve as a cautionary tale for those making decisions on health care reform in Washington, D.C., but the message has not yet been received. To understand where our country is going, all we have to know is where Washington state has been the last 17 years.

Doug Ericksen represents the 42nd District in the Washington House of Representatives and is the ranking Republican on the House Health Care and Wellness Committee. Roger Stark is a retired surgeon and a health care policy analyst with Washington Policy Center, a non-partisan public policy research think tank in Washington state.