Legislative Update
April 11, 2012
By Marie Sullivan, WSSDA Director of Governmental Relations
Legislature wraps it all up with a bow
WSSDA Legislative Links
After the Governor declared a second special session shortly after midnight, negotiators again
went behind closed doors to hammer out the last details on policy and budget bills.
Legislators, lobbyists and staff were exhausted as the sun began to rise, but both chambers
kept the momentum going by passing bills. Around 7:30 a.m., lawmakers adjourned sine die
for the second time in 24 hours.
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Legislature passes K-12 health benefits bill
Legislative Committee
After days and hours of negotiations, the Senate took the first step in reforming health benefits
for K-12 employees. At about 4:30 a.m., by a vote of 25-20, the Senate passed ESSB 5940.
The bill was immediately transmitted to the House, which went into caucus after passing
3ESHB 2127, the supplemental operating budget. The House passed the bill 53-45 just before
6 a.m.
During the interim, school districts participated in the Health Care Authority advisory group
and supported the recommendations of the December report for a consolidated health
benefits system that had:

The opportunity for school district savings;

More uniformity of benefits through a state-operated system;

More transparency and access to data for school districts and decision makers alike;

Shared premiums by all employees; and

Equity between employees and families without increased costs to districts.
To reach these objectives would have been tough in any year. But with a short session and
the enormous pressure against moving K-12 employees to a consolidated health benefits
system exerted by the Washington Education Association, insurance providers, and other
related industries, the bill was drafted and redrafted on a regular basis. (Rep. Pat Sullivan, DCovington, said he hadn’t seen so many versions of a bill in his eight years as a legislator.)
Here are the main components, as passed the Legislature today:
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
All employees in pooling arrangements who choose medical benefit coverage must
pay a minimum premium, subject to collective bargaining.

Employees who choose a “richer” benefit plan must pay higher premiums.

School districts that offer medical, vision and dental benefits are required to:
1.
2.
3.
4.
5.

Offer a high deductible health plan option with a health savings account;
Make progress toward employee premiums in which the full family coverage
is not more than three times the premium for an employee purchasing single
coverage for the same coverage plan (with one exception); and
Offer at least one health benefit plan in which the employee share of the
premium cost for a full-time employee does not exceed the share of
premium cost paid by a state employee.
In addition, school districts must use an open competitive process to
purchase services, except where an open process would compromise costeffective purchasing; and
Make progress on promoting health care innovations and cost savings,
including significantly reducing administrative costs.
Reporting on health benefits information is expanded from current law, and failure to
report would trigger penalties, described at the end of this summary. School districts
and their benefit providers would be required to annually report information and data
to Office of the Insurance Commissioner (OIC) for the prior calendar year. Elements
include:
o Progress toward greater affordability for full family coverage, health care
cost savings, and significantly reduced administrative costs;
o Offering a high deductible health plan option with a health savings account;
o A plan summary, which would include:

The financial plan structure and overall performance of each plan,
including total premium expenses, total claims expenses, claims
reserves, and plan administration expenses, including broker fees.

A description of the plan’s use of innovative health plan features;


Data to help external audiences understand employee health
benefit plan coverage and costs, including the total number of
employees and, for each employee, the employee’s FTE status,
types of coverage or benefits received, number of covered
dependents, the number of eligible dependents, the amount of the
district’s contribution to premium, additional premium costs paid
through the employee’s payroll deduction, and the age and sex of
the employee and each dependent.
Data to help districts more effectively and competitively manage
and procure health insurance plans for employees. Information
must include:

a summary of the benefit packages offered to each group
of district employees, including covered benefits,
employee deductibles, co-insurance and co-payments,
the number of employees and their dependents in each
benefit package;

aggregated employee and dependent demographic
information, including age band and gender, by insurance
tier and by benefit packages; total claim payments by
benefit package, including premiums paid, inpatient
facility claims paid, outpatient facility claims paid,
physician claims paid, pharmacy claims paid, capitation
amounts paid; and other claims paid;

total premiums paid by benefit package;


a listing of large claims (more than $100,000), including
the amount paid, the member enrollment status, and the
primary diagnosis
A description of how districts are reducing administrative costs,
improving customer service, reducing the differential plan premium
rates between employees only and family health benefit premiums,
and protecting coverage for part-time K-12 employees.

All of the school district and benefit provider data and information will be compiled by
the OIC, who will submit a report to the Governor, the Legislature, and the Health
Care Authority on an annual basis by December 1, beginning in 2013. The report will
include a summary of each school district’s health insurance benefit plans and each
district’s aggregated financial data and other submitted information as described
above.
o OIC may adopt rules to meet the reporting requirements.
o

The OIC is required to consult with school district representatives on the
reporting.
By June 1, 2015, the state Health Care Authority must report to the Governor,
Legislature and the Joint Legislative Audit and Review Committee (JLARC)
information, based on two years of school district reports on health benefits.
o HCA will establish a specific target to reach the goal of greater equity
between full family coverage and employee only coverage on the same
benefit plan. HCA will consider the appropriateness of the 3 to 1 ratio or
o
alternatives.
HCA will also study and report the advantages and disadvantages of:

Whether better progress on legislative goals could be best
achieved through consolidation of school district health insurance
purchasing through a single, consolidated school employee health
benefits purchasing plan;

Whether better progress would be achieved by using the PEBB,
and if that would be preferable to creating a separate system;

Whether certificated or classified employees, as separate groups,


would be better served by purchasing health insurance through a
single consolidated school employee benefits plan or participation
in PEBB; and
An analysis of the implications of various options on costs to the
state and school employees, impacts for existing purchasing
programs, and a proposed timeline for implementation.
By December 31, 2015, JLARC must review the school district reports submitted by
OIC, and make its own report on the progress school districts and their benefit
providers are making in achieving legislative goals of transparency, equity, and
affordability. JLARC is also directed to review and make recommendations on the
value of alternative health benefit purchasing systems for K-12 school employees.
o The Legislature is directed to take all steps necessary to implement the
recommendations of JLARC unless the Legislature adopts alternative
strategies to meet its goals during the 2016 session.

The bill also includes an incentive for school districts to comply with the
requirements. In Section 7(4)(a), JLARC is authorized in the 2015-16 school year to
determine which school districts have met the legislative goals and requirements of
the act and will rank order them from highest to lowest in terms of their performance.
o The committee shall allocate performance grants to the highest performing
districts from a performance fund of $5 million appropriated for this purpose.
o Performance grants would be used to reduce employee health insurance
o
copayments and deductibles, with the goal of the grant to have a meaningful
impact in the district.
However, if JLARC determines that districts and their benefit provides have
not made adequate progress, in the judgment of the committee, then the
report to the Legislature must contain advantages, disadvantages and
recommendations on:

Why more progress wasn’t made;

What legislative or agency actions would help remove barriers to
improvement;



Whether school district health insurance purchasing should be
through a single consolidated school employee health benefits
purchasing plan or through the PEBB; and
Whether certificated or classified employees, as separate groups,
would be better served by purchasing health insurance through a
single consolidated school employee health benefits purchasing
plan or through participation in PEBB.
Regarding the penalties, if the OIC determines that a school district has failed to
comply with the reporting requirements for two reporting periods, the OSPI is
required to limit the school district’s authority to offer health benefits to employees
only through the state PEBB system. If the noncompliance in reporting is caused by
the benefit provider, the OIC may take enforcement actions under Title 48 of the
Revised Code of Washington.
o The data reporting requirements apply to school districts that are selfinsured. Failure to comply would result in a loss of self-insured status.
Lawmakers in both chambers said they expected the bill would require some adjustments over
the next few years as school districts work with their providers and employees to modify plans
and comply with the reporting requirements. That said, proponents said the bill offered a
positive step forward to meeting the legislative goals of transparency, equity, affordability, and
savings for health benefits provided to school employees.
WSSDA will be working with districts and other education organizations to help explain the bill
and legislative expectations, as well as identify concerns and areas for improvement for the
2013 session.
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