Reforms In Critical Condition Retreating Insurers Hurt State’S Health-Care System

Five years ago, Washington state set out to overhaul its health-care system.

The goals were lofty: Everyone would have equal access to health care. Everyone would get health insurance. Managed care would get costs under control.

“We felt we were told by the people to do something, and do it right,” said former state Rep. Dennis Dellwo, who helped write the landmark state health-care reform act in 1993. “We decided on the big bang theory - dramatic changes, all at once.”

But now, about 600,000 people in the state are still not insured - the same rate as in 1992. That’s more than one in 10 people.

Insurers, which lost millions of dollars in Washington last year, are pulling out of government-sponsored managed-care plans.

The largest insurer in Eastern Washington announced it won’t sell coverage to new customers who buy insurance individually rather than through employers. Premera Blue Cross said it lost $70 million selling individual insurance plans since 1994.

Group Health Cooperative is now the only company selling individual plans east of the mountains.

All told, more than 75,000 people in Eastern Washington will have to find a new way of getting health insurance next year.

That coverage will be more expensive. Most insurance companies are hiking rates by at least 10 percent next year.

What triggered such a widespread meltdown?

Health-care costs are again rising, largely because of expensive technology and the growing price of prescription drugs.

Insurance companies complain that government-sponsored plans, such as Medicaid and the Basic Health Plan, don’t pay enough to cover the cost of care.

And most of the insurance reforms approved in 1993 were tossed out two years later, after the demise of President Clinton’s national health-care plan. What few changes remain allow people to buy insurance, get needed medical care and then drop the coverage.

Insurance companies say the rules, intended to help sick people get health coverage, have cost them millions of dollars.

“I think this is the beginning,” said Neal Kroll, an insurance agent. “The house of cards is falling, and it’s not going to be too many days until the general public opens its eyes to see what’s happened to the quality of health care in Washington state and the choice of plans.”

Some people fear the state is moving back toward a two-tiered system, where people who can afford private insurance get much better care than those on government-sponsored plans.

Next year, only three insurers will offer the state’s managed-care program for Medicaid recipients and the state’s program for the working poor. Only three plans will provide the Medicare managed-care program in Spokane County.

“It’s creating a lot of heartache,” said Francis Nicolet, 67, a Spokane Valley man who’s choosing a new Medicare managed-care provider before January. “A lot of people are really upset over this. It’s like being thrown into a cement mixer, and seeing what comes out the funnel.”

Washington state’s health-care reform act of 1993 was supposed to give everyone health insurance by 1999. It promised portability and coverage for pre-existing conditions after only three months.

But most of the law was gutted in 1995 - except for coverage of pre-existing conditions.

“You cannot eliminate the pre-existing condition barrier without insuring everyone,” Dellwo said. “That’s the reason we’re having problems now.”

Everyone points to pregnancy coverage as an example. Pregnant women in Washington can buy an individual health insurance plan before they’ve given birth.

Commercial plans usually have between 19 and 29 deliveries per 1,000 pregnancy-age women.

Premera Blue Cross has seen 330 deliveries per 1,000 women in its version of the Basic Health Plan. About 80 percent of those deliveries happened in the first nine months of enrollment in the plan.

Nearly 75 percent of the women canceled their coverage shortly after having their babies.

At Group Health Northwest, a man bought insurance, had gall bladder surgery a month later and then dropped the plan.

For insurers, this doesn’t add up.

Insurance is based on the idea that people pay a certain amount every month for protection against an unforeseen event. Insurers make their money because that event doesn’t always happen. But that’s not how health insurance works in Washington, insurers say.

“It’s like buying homeowners insurance after your house burns down,” said Sharon Fairchild, president of Group Health Northwest in Spokane.

Government-sponsored managed-care plans also are struggling.

Managed care rewards providers for preventive care and penalizes them for expensive treatments. Programs such as the state’s managed-care Medicaid plan, Healthy Options, cover people who used to receive care through emergency rooms with primary-care doctors. This, in theory, saves money and lives.

Agnes Rossi, 22, loves Healthy Options. She enrolled herself and her son about three years ago through Medical Services Corp., which won’t offer the program next year.

None of the other Healthy Options plans in the county offer Rossi’s doctor and her son’s doctor. Her son has asthma. She has migraines. Regular contact with their regular doctors is important, Rossi said.

“I’m trying to figure out which is best, and I don’t know what to do,” she said. “It’s really frustrating.”

By squeezing out waste and controlling costs, managed care reduced the medical inflation rates that hit almost 20 percent in the late 1980s.

But in the past two years, health-care costs have started inching higher again. Almost 60 percent of health maintenance organizations, which pioneered managed care, lost money last year. They’re raising rates.

Here is the major dilemma: Health care has always been a balancing act of access, quality and cost. People can’t have universal access to high-quality care without paying for it.

But no one wants to pay more for health care. What they want is the best care possible and the freedom to see any health-care provider they want, whenever they want.

Add to this mix new technology and new drugs, the biggest driver in health-care costs. People go to their doctors, asking for new drugs advertised on TV. They want pills that need to be taken only once a day instead of three times a day, at a higher cost.

Insurance company officials say it’s not difficult to predict what will happen if nothing changes.

“Rates will continue to rise,” said Trae Andersen, a senior vice president at Premera Blue Cross. “Enrollment will continue to shrink. Insurers will continue to question their ability to remain in the market.”

Francis Nicolet and his wife, Carol, have been studying their choices since Providence Health Plan announced it was getting out of the business in Washington. They’ll probably pick a managed-care Medicare plan from Group Health or Premera Blue Cross. They’ll pay an extra $100 a month.

The couple lives on about $1,200 a month from Social Security. Health care is very important to them. Francis Nicolet worries about what might happen in the future.

“It really makes you kind of squint and wonder and look down the road a little. The other companies, if they close out too, then where will everybody be?”