Operators are all smiles in the cover illustration for the exchange’s RFP.

OLYMPIA, Oct. 29.—You might call it one of the biggest ironies in state government today. Labor unions were among the biggest cheerleaders for health care reform. But now that the effort is nearing liftoff, the agency responsible for the Washington program is planning what may be the biggest outsourcing effort in state history.

The state Health Benefits Exchange is seeking bids from private operators for a call center that will serve 1.5 million customers when health reform kicks into high gear next fall.

And as you might expect, Washington’s biggest state-employee union is crying foul. Greg Devereux, executive director of the Washington Federation of State Employees, says those jobs ought to go to state employees. “We’ve spent millions of dollars and millions of hours working on national health care reform. We care as much as any employer about health care. And we don’t think the result should be that public employees could potentially be laid off because of it.”

Exactly how many jobs and how much it will cost won’t be determined until a winning bid is announced, perhaps as soon as the end of the year. But it’s safe to say that hundreds of jobs are at stake, and that it may displace unionized state employees who are doing similar work for the Department of Social and Health Services. Exchange officials say it makes more sense to give the business to the private sector. And if it all seems to come from the blue, the exchange was given the right to make that decision under the laws that gave the agency sweeping authority. Labor was among its biggest boosters. Now the Federation says the exchange needs to be reined in. Watch for the battle to play out when the Legislature returns in January. Please stand by.

A Mammoth Operation

Last Friday the state health exchange – which recently adopted the name Washington Healthplanfinder for marketing purposes – began soliciting bids for its call center. Washington is among the states that are developing their own marketplaces where standardized health insurance policies may be bought and sold, a core concept in the national health reform program. The call center is the element that makes it all tick, a mammoth operation that will serve nearly one-quarter of the state’s population. It will dwarf the call centers now operated by the state of Washington for Medicaid programs, workers’ compensation and unemployment insurance.

Consultants figure that as many as 380,000 Washington residents will buy individual insurance policies through the exchange, in large part because it will be the only place where it will be possible to purchase insurance with a federal subsidy. Size of the subsidies depends on adjusted gross income and not everyone will qualify. What it means is that when people have questions – and many probably will – someone has to take the call, or answer it online in the form of real-time chat, a function that also will be provided by call center employees.

Next come small businesses. Any business with up to 50 employees will be able to buy insurance on the exchange. The bid document, called a request for proposal, or RFP, says the exchange will probably win only a small portion of that business. But thousands of employers are expected to make inquiries, and ultimately somewhere between 10,000 and 30,000 workers will be covered that way.

And then there’s Medicaid. Some 350,000 Washington residents will be added to the rolls. Meanwhile the call center will assume assistance functions for 750,000 Medicaid clients over a period 12 to 15 months – some but not all, taking over duties now handled by DSHS.

Add it up. That’s 1.5 million people. Many of them will be calling at once. Crunch time begins next Oct. 1 when signups begin; health reform launches on Jan. 1, 2014.

Free to Contract Out

Normally a series of restrictions kick in when the state wants to go to the private sector to provide a service currently offered by state employees – as is arguably the case with at least some elements of the Medicaid program. State employees have to be given a shot at competing and the whole process is so complex that most state agencies don’t bother. It’s an age-old argument. Unions say the rules offer an important protection and privatization advocates grit their teeth. But the health exchange is a different sort of animal. The enabling legislation created a quasi-governmental agency that doesn’t have to play by the same rules.

What it means is that if the agency wants to go to the private sector, it can – and in this case it makes sense, says health exchange CEO Richard Onizuka. He defended the decision Oct. 17 at a meeting of the Joint Select Committee on Health Reform Implementation, a legislative panel that is overseeing health reform policy. There will be a crunch when the sign-ups begin, but once that first rush has played its course he said there won’t be as much need for people to take calls. The implication, of course, is that a private operator can deliver the chop more easily than the state.

Onizuka said, “Staffing is more flexible with a contracted call center rather than an employed call center, so we think there is more ability for an outsourced call center to shift their resources and staffing depending on the needs that we have. We think we are going need a lot of resources initially. We are not going to need a lot of those resources in 2015 and beyond.”

Won’t Go to India

Private call center operators are ramping up nationally and exchange staff says four or five big players are making a play for business in multiple states. Some 29 vendors expressed interest when the exchange issued a request for information, a precursor step in the bidding process. The RFP allows any of them to bid so long as they are located in the United States. Meaning at least that the state call center won’t go to India or the Philippines. The exchange issued its RFP initially the day Onizuka testified, but the health exchange board voted the following day to withdraw it after Devereux protested. Last week it voted to add a numerical preference for Washington-state contractors, granting them a five-percent advantage in scoring. The rewritten solicitation was issued Friday.

Not that it settles anything, Devereux says. The issue isn’t whether the work remains in Washington state, but rather whether it is done by state employees. At least some DSHS call center workers will be displaced when Medicaid functions are transferred, he said. Yet the exchange is exempt from the rules that require the state to give workers who might be displaced a chance to compete with outside contractors, so the union can’t claim an unfair labor practice. Other functions are entirely new. Devereux complains the decision to outsource seemed to “be preordained” without public airing of the whys and wherefores, and he calls it astonishing that a decision of such magnitude could be made with so little public scrutiny. “It makes me nervous that there aren’t more laws that apply to them, and that is something we will take up in this next legislative session.”

Quality Called Concern

Devereux maintains state employees will do a better job than the typical private-sector call center employee. “Our concern is about the quality of the conversation between the individuals needing services and the people providing the information,” he said. “A lot of the [Medicaid] and the adjusted gross income population are going to have English as a second language. They’re going to have all kinds of issues that you can’t resolve by a computer. You need a trained, skilled person to help you navigate through the system. I don’t know if they are going to be hiring workers who don’t have health benefits, who don’t have sick leave, who don’t have anything else – I don’t know what the quality of that workforce is going to be.”

Devereux’s argument was seconded at the Oct. 17 hearing by state Sen. Steve Conway, D-Tacoma, one of the Legislature’s biggest labor advocates. He called the decision to outsource a “dangerous departure.”

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