Article by Erik Smith. Published on Monday, August 30, 2010 EST.

Unfortunately, the program does nothing for employers who already offer insurance — and falls short of goals.

By The Editors

Washington State Wire

OLYMPIA, Aug. 30.–Though well intended, the Washington State Health Insurance Partnership (HIP), like too many government programs today, attempts a short-term political fix that may in the end only distort the longer-term problem.

On Sept. 1 the HIP will begin accepting applications from small businesses for subsidized group health insurance plans.  The available subsidy funds for this year are expected to be exhausted quickly, so interested employers should check out the HIP website at http://www.hip.hca.wa.gov/overview_employers.html or contact a HIP certified broker. 

           Although certification for participation will begin in September, actual insurance coverage will not start until January 1, 2011.

To qualify for a subsidized health plan small business employers must (1) certify that at least half their workforce is composed of low-wage employees and (2) ensure that eligible employees apply for subsidies.

            The first requirement is met if half an employer’s workforce earns monthly wages that are below 200 percent of the Federal Poverty Level.  The employer need not consider income to the worker from other sources, just the actual wages being paid, part-time or full-time, by the employer.  In any case, no one will check on this certification.

Under the second requirement, employees whose gross family income is at or below 200 percent of the Federal Poverty Level may qualify for insurance premium subsidies.  This will be checked. The amount of subsidy an employee receives is dependent on the gross family income and the number of people in a family, but can be up to 90% of the employee’s share of the premium. 

For 2011, $2 million is authorized for subsidies and will be awarded on a first-come, first-served basis.  Employers will be able to pick from an approved set of small group insurance plans.  In 2012-2014 there will be almost $9 million per year available.

So What’s Wrong?

The underlying problem is real.  In Washington State fewer than 41 percent of small business firms provided health insurance coverage in 2009.  So what is wrong with this “small business assistance” program?

First, it discriminates against employers who were responsible enough to provide insurance to their low-income employees and will now see their tax dollars used to subsidize their less conscientious competitors.

Second, after January 2011 it creates an incentive for some employers to drop their existing health insurance and enroll in HIP a couple days later.  Such an option undermines the very purpose of the program – reducing the number of uninsured, but the HIP Board refused to impose any no-insurance look-back requirement.

Third, the statutory requirements forced HIP to spend millions of dollars re-inventing an insurance model that is already out of date.  Even during this transition time to federal health care reform, there are lower-cost small-business group options and portable individual plans with multiple employer pre-tax options that HIP cannot offer because of statutory limitations.

There are other problems, but as it is the Health Care Authority appears set to declare another “success.”  This is what happens too often to government oversight when there is no competition and government is also the program manager.   

There will never be perfect government programs, but the citizens of Washington deserve a better effort from our state Legislature.  Instead of spending millions of dollars on consultants or the bureaucracy to run three different private health insurance programs within the Health Care Authority, the state should (1) make subsidies available to any low-income workers and (2) permit private insurers to offer the same low-cost basic plans that HCA is subsidizing in another new program.  If this is not possible and HIP funding is insufficient, at least it ought to ensure that the real uninsureds are the workers who receive the benefit.

One Bright Spot, the HIP Staff

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