Cascade Care 2.0 (SB 5377) – our state’s best opportunity to rapidly and significantly improve health care affordability – passed the Washington State Senate on March 2 with amendments that preserved key provisions to make health insurance more affordable for consumers, but stripped out a key cost containment measure. SB 5377 now heads to the House for consideration.

The bill is the next step on our path to improve affordability and is a follow up to the Cascade Care 1.0 (ESSB 5526) bill from 2019, which created standard plans and the country’s first public option plan on the Health Benefit Exchange, and mandated a study on providing subsidies to people under 500% of the federal poverty level.

It’s Urgent to Make Health Care More Affordable

Families that have health insurance are healthier and are more able to prevent costly emergency room visits for untreated chronic issues and avoid medical debt. Workers with health insurance are more productive and people who are financially secure have more disposable income to contribute to our economy.

While most people get insurance through their employer or public systems like Medicare and Medicaid, for many people, including the unemployed, small business owners, and people in transition, the individual market on the Exchange is their only option.

Washington’s uninsurance rate is on the rise for the first time since the ACA was implemented, and the pandemic has only made it worse. The uninsured rate among newly unemployed workers increased during the pandemic from 10% to over 40% over the past year. There are now over 500,000 uninsured Washingtonians. When health care costs are too high, consumers end up having to make tough choices: buy insubstantial Bronze plans (which have lower premiums but high costs when you need care), drop health care in order to cover other essential needs like rent or food, or forego health insurance altogether. Low- and moderate-income people bear the brunt of ballooning health care costs, while large hospital chains and insurance carriers pad their reserves, CEO salaries, and investment accounts by the millions.

While federal subsidies through the Affordable Care Act have gone a long way toward improving affordability, many people are still left out, such as undocumented immigrants, those facing the “family glitch” (coverage is often not affordable for families, since subsidy assistance is based on an individual’s income) and those who fall off the “subsidy cliff”, where people lose subsidies if they earn even a single dollar above the cut off. What’s more, many low- and modest-income people are still priced out, even with federal subsidies.

Cascade Care 2.0

SB 5377 will make health insurance more affordable by creating a state “subsidy wrap” on the Exchange on top of existing federal subsidies, and by allowing cost-sharing assistance, all based on the subsidy study required in the original legislation. This year’s bill also makes key improvements to the public option by requiring participation for large hospital chains.

Cascade Care 2.0 will:

• Make coverage more affordable, particularly for low- and moderate-income people who are uninsured or underinsured;
• Improve networks by requiring hospital chains to participate in the public option if they own or operate four or more hospitals;
• Improve clarity and transparency for consumers by limiting lower-quality non-standard plans;
• Direct subsidies to silver and gold standard plans, which are higher-value plans that cover more services before the deductible;
• Strengthen our state’s public option, which will lower premiums and give consumers more access to high quality plans.

Controlling Costs and Battling Profit-Driven Health Care

One crucial provision of the bill to control costs and hold wealthy hospital chains accountable was amended out in the Senate due to industry pressure, but EOI is working with our coalition and legislative partners to push for the provision to be added back into the House version. The provision would have capped reimbursement rates for hospitals at a 135% base rate of Medicare benchmarks. What does this mean and why does it matter? Like all providers, hospitals are reimbursed for the care they provide. Medicare rates are public and transparent, strictly audited every year, and have the benefit of being widely accepted and understood by providers across the nation. A report published by Rand recently found that setting prices for all commercial payers somewhere between 100-150% of Medicare rates could reduce hospital spending by up to $237 billion, which could reduce national health care spending by up to 6.5%.

Without controlling costs at the root, large hospitals – including those claiming nonprofit status – will continue to stockpile enormous profits while the average American pays through the nose for basic coverage.

The 2019 Cascade Care bill capped provider reimbursement rates at 160% of Medicare, but this target did not result in any meaningful change in prices for consumers. Adding a tighter hospital-specific reimbursement rate cap would give the state increased leverage and purchasing power, rather than allowing health care costs to be set by the whims of the market and powerful health care industry players.

While large hospital chains cry poverty at the mere mention of a reimbursement rate cap, a look behind the curtain shows tremendous wealth. Our health care system continues to be driven by profits and wealth generation, in good times and bad. Large hospital chains and insurance carriers made millions off the pandemic this past year. The Providence Health System alone raked in $500 million in federal pandemic assistance, earns about a billion per year through its hedge fund investments and venture capital firms, and guards nearly $12 billion in cash reserves, all while paying zero in federal taxes due to its nonprofit status, and botching vaccine delivery by preferencing high level donors and board members over vulnerable and marginalized community members.

Health care is a human right and affordable coverage is a cornerstone of a healthy economy. EOI is proud to champion Cascade Care with our legislative, coalition, and community partners – including you!

Stay tuned for updates and how you can help fight for affordable coverage!