However, a funny thing happened on the way to health care reform. In 1995, a bumper crop of conservative legislators took over in Olympia and undid nearly all the good work. In fact, the only remnants of 1993's Health Services Act are some regulations over the insurance industry. But if insurance companies have their way this session -- which is likely (the latest data from the Public Disclosure Commission shows that Premera Blue Cross contributed nearly $30,000 to state legislative candidates in 1998 and nearly $70,000 since 1996) -- it's a safe bet one of the last few reforms will die a quiet death before the session is over.
Senate Bill 6067, sponsored by Senator Alex Deccio (R-Yakima), a former insurance broker who received $1,150 in contributions from Premera Blue Cross late last year, is intended to address people who buy their own health insurance rather than getting it through the government or their employer. These are mainly people who are self-employed or are in transition -- students who are no longer on their parents' plan and don't have a job, or retirees who haven't reached the required Medicare age of 65. It's a small piece of the population (about 250,000 people), but until 1993, this little corner of the market (the "individual subscriber" market) turned a tidy profit. According to the office of the state's insurance commissioner, the average individual subscriber paid out $78 in premiums in 1993, while receiving only about $54 in benefits.
Here's why insurance companies profited: Under the pre-1993 system, the pool of individual subscribers was culled down to include only the healthiest and most patient, since few sick or potentially sick people were willing to wait as long as two years to get coverage. It was not uncommon for carriers to screen out people who needed insurance the most -- those who were already sick or were likely to get sick -- by requiring detailed personal health histories.
To sweeten the deal, people who bought their own insurance tended to demand fewer services for their health care dollar, meaning higher profit margins for the insurance company. As a first step in the long-term restructuring of the health care industry, the 1993 legislature instructed Insurance Commissioner Deborah Senn to clean up some of these practices. Faced with the possibility of stricter reforms, insurance companies acquiesced, and executives from the state's seven largest insurers appeared with Senn at a 1994 press conference to tout the changes.
Instead of setting their own waiting periods before coverage kicked in, which had previously ranged as high as two years, insurers were limited to just three months. Health screening for pre-existing conditions was prohibited, and restrictions on transferring between different health plans were lifted. The individual subscriber market would no longer be as profitable, but the reforms to come were supposed to make that a moot point.
Then the 1995 legislature came along and infected health care reform with some free-market zeal, undoing most of the changes that had occurred. Most notably, they passed House Bill 1046, gutting the earlier reforms and scaling back the state's Basic Health Plan -- a program aimed at covering up to 200,000 working people and children. Thankfully, Senn's insurance reforms stayed in place. But insurance companies claimed they couldn't make the new system work, threatening to pull out of the individual subscriber market entirely.
In November 1998, they did just that. Premera Blue Cross refused to offer any more new policies to individual subscribers. Regence Blue Shield and Group Health followed suit in September 1999. All three had been among the companies to appear with Senn in 1994, touting the very changes they were now decrying. As of January 1 of this year, you cannot get a new policy in the individual subscriber market in 31 of Washington's 39 counties, though if you're already signed up, your policy is still good as long as you keep paying your monthly premiums.
To entice insurance companies back to the market, Senator Thibaudeau, other lawmakers, and a group of consumer advocates have been working with insurance carriers to make some changes to the rules governing the individual subscriber market. Unfortunately, the changes they've crafted will make the market look an awful lot like it did in the days before 1993.
Barbara Flye, executive director of Washington Citizen Action, was among the consumer advocates working to change the market. "I'm frustrated," she says. "I fear that the conversation is moving off of what is good health care policy to deal with the politics of the situation." According to Flye, the three-month waiting period will be extended to six months or a year, though a compromise of nine months is most likely. Insurers would be allowed to ask anyone applying for an individual health plan to fill out a "questionnaire" on their personal health history, though the exact details of what they could ask haven't been worked out yet. Based on the answers, the top five percent of high-risk individuals could be sent to the more expensive Washington State Health Insurance Pool, a state-run plan that is financed by a tax on all insurance companies operating in Washington.
Chris Bruzzo, a spokesman for Regence Blue Shield, bristles at the term "health screening." The goal, he says, is to make sure that high-risk people end up where they belong. He adds that Regence will still have to pay for part of the cost of their insurance anyway, through the insurance company tax.
Nonetheless, that is a cost that will be spread over all of the carriers, while Regence, Premera, and Group Health will reap the benefits of being able to screen out unhealthy consumers in the individual market.
Jim Stevenson, a spokesman for Senn's office, says while the changes don't impact a vast number of Washingtonians, they highlight where the industry is at right now, and symbolize its clout.
"Insurance companies are using the example of the individual market in order to drive this major wedge into health care reform," he says.
The individual market is an easy target for insurance companies, adds Flye. "It's not organized. It's not in groups. It's the least powerful," she says. "This is not just about making the individual market more profitable, but really a way for them to repeal consumer protection in other markets as well. It's a jumping-off point."
