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Frockt and Stokesbary discuss health care financing heading into 2021 session

Sen. David Frockt (Vice Chair Senate Ways and Means Committee) and Rep. Drew Stokesbary (Ranking Member, House Appropriations Committee) agree that Washington State’s health care sector needs more investment, though they have different perspectives on how to pay for it.

As the legislators were discussing post-pandemic economic stability at a panel session Wednesday, they each offered their position on Gov. Inslee’s “covered lives assessment.”

I was pretty concerned about the governor’s proposal to levy a tax on health insurance. On the marketplace and in the small business pool, carriers are required to pass those taxes along to consumers in the rate setting process. So it is a direct tax on the cost of care that people will pay out of pocket. When we are spending all of our effort trying to identify ways to make health care more affordable, I really fail to understand why somebody would think it’s a great idea to explicitly make health care more expensive,” said Stokesbary.

Gov. Inslee’s biennial budget proposal calls for an assessment on health insurers, Medicaid managed care organizations, limited health services contractors and third-party administrators that would start in March 2022.

The proposal states that the charge will be assessed based on each person covered by the insurers, with the expectation of bringing in $343 million for the 2023-2025 biennium. About $203 million would be raised in the first fiscal year of the assessment’s implementation.

The estimated spending total that may be necessary for public health is around $140 million per year, over $200 million per biennium, according to Frockt. Based on those figures, Frockt thinks the Legislature will need to get creative.

Stokesbary said that he agrees with increasing public health investment, though he thinks there is room in the budget to carve out funds without taxing health insurers or cutting other services.

When looking at different ways to pay for the state’s array of exigent health care needs, the assessment on health insurers is intended to have the most broadly distributed impact, said Frockt.

When you look at all the different alternatives for financing, the thought is that because the proposal will spread the cost the widest and have the widest benefit, that it will end up having the most minimal impact on consumers,” said Frockt.

Stokesbary acknowledged that the tax on health insurers is quite broadly applied “if you take as a given that the funds have to come from sort of tax or fee in the health care space.” Nevertheless, Stokesbary said that legislators shouldn’t jump to the conclusion that the revenue for funding these health care priorities has to come from the health care sector. Alternatively, he suggests using the general fund or other flexible dollars.

Frockt and Stokesbary agree on two major points: 1) foundational public health priorities in Washington State have long lacked adequate investment and 2) funding obligations related to the McClearly decision are at the root of that underinvestment. With the focus of the state’s public policy on education funding, public health was overlooked.

Stokesbary is not convinced that the budget issues of the moment will be near as dire as what legislators faced with respect to McCleary.

Downstream of underinvestment in public health, legislators find themselves needing to address a long list of needs with limited funding mechanisms to draw on. Investing in public health, providing more subsidies on the exchange, and state reinsurance funding are all priorities, said Frockt.


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