New report offers options for improving the affordability of health care in Washington state

OLYMPIA, Wash. — The Office of the Insurance Commissioner (OIC) issued a new report today (PDF, 3.20MB) studying five potential policy options that could make health care more affordable in Washington state. The report, delivered to the state Legislature, uses pricing data to provide an economic and actuarial analysis of each policy option that estimates savings for consumers, organizations and the state’s economy.

“We’ve made great strides in getting people access to health coverage in Washington state, but it’s simply not enough,” said Insurance Commissioner Mike Kreidler. “Too many people have insurance they can’t afford to use, either because the deductibles are too high or medical costs are growing faster than inflation. This report looks carefully at several options we’ve talked about generally and provides the detailed analysis we’ve needed to help our policymakers find a path forward for consumers, employers and our health care system.”

The report is the first to use state-specific health care claims and spending data to lay out how each policy option could be implemented. The actuarial analysis estimates the impact on health care spending in Washington, either from lower premiums or lower cost of services. The economic analysis estimates how those savings could increase employment and wages.

The Legislature provided the OIC and the Attorney General’s Office with funding in 2023 to review key factors impacting the affordability of health insurance for individuals, businesses and state government. A preliminary report on Washington’s health care system (PDF, 3.29MB) was delivered in December 2023.

For each policy option, the final report asks:

• What would the impact be on health care spending and the state’s economy if it were implemented in Washington state?
• Which Washingtonians would see health care savings if the policy was implemented?
• What implementation issues would the policy face?

The five policy options studied are:

1. Creating a reinsurance program in the individual and small group health insurance markets.
2. Increasing the minimum medical loss ratio standard for all commercial health plans to 88%.
3. Using reference-based pricing for health care facility and provider payments where the price for health care services is tied to Medicare reimbursement rates.
4. Using hospital global budgeting to pay hospitals a fixed amount for all inpatient and outpatient services provided to a patient population in a given year.
5. Meeting the Health Care Cost Transparency Board’s expenditure growth targets.

The report shows that these policy options can each improve health care affordability. The populations impacted, the potential cost to the state, and the degree of difficulty in implementing each policy option vary.

“Some of these ideas have been talked about before but now we have specific data to help policymakers make meaningful decisions,” Kreidler added. “It’s clear from this report that we can make a difference and start tackling the underlying costs of health care that we’ve been battling for too long. I’m very grateful to the Legislature for their willingness to make this investment and encouraged by what we’ve learned.”

Read a fact sheet (PDF, 120.93KB) on the 2024 Final Report on Health Care Affordability.