Washington’s State-Based Approach to Lowering Consumer Costs and Increasing Choice

On April 29th, Washington’s legislature sent SB 5526, referred to as Cascade Care, to the Governor’s desk for signature. The bill requires the state health care authority to contract with one or more carriers to provide standardized plans to Washington residents beginning in 2021. Standardized plans are insurance plans offered on the exchange that have uniform cost sharing for covered services across plans, making it  simpler for consumers to shop for a plan that is best suited for their needs without getting caught up in comparing prices between plans. These new options will be offered in addition to the plans currently available, giving residents more options for coverage. Washington has taken charge in shaping the plans that are offered to consumers by also creating requirements for more affordable and standardized bronze, silver, and gold qualified health plans to be offered on the state’s exchange. The bill also directs the state to develop a plan, including funding sources, for offering premium subsidies for those with incomes up to 500% of the federal poverty level.

This legislation is a unique state-based approach to provide quality, affordable coverage to residents of Washington. In 2019, premiums increase 13.8 percent on Washington’s exchange. Additionally, the number of residents purchasing insurance through the exchange dropped about 4 percent. As this new bill states, the standardized plans must be designed to “reduce deductibles, make more services available before the deductible, provide predictable cost sharing, maximize subsidies, limit adverse premium impacts, reduce barriers to maintaining and improving health, and encourage choice based on value, while limiting increases in health plan premium rates.” Achieving these policy goals will provide meaningful improvement for consumers in Washington.

Part of the late debate regarding this legislation surrounded the development of reimbursement rates. Ultimately, the reimbursement rates for these plans were set to not exceed 160% of Medicare rates for all covered services, excluding pharmacy benefits. This compromise is designed to save consumers money through lower premiums, as typical private reimbursements rates are higher than Medicare rates. Additionally, rural critical access hospital and sole community hospital reimbursement rates may not be less than 101% of allowable rates defined by CMS, and primary care reimbursements may not be less than 135% of Medicare rates to make sure that patients have access to these important services and providers.  

United States of Care commends Washington for passing a state-based approach that targets affordability and access. Given the federal landscape, it is vital for states to pursue their own innovative solutions that work for their specific populations and needs. Washington has taken a big leap ahead and we look forward to tracking the progress this policy will make in providing affordable, quality coverage.