The state's Basic Health Plan is in serious trouble. Squeezed by rising medical costs on one side and hostile Republican politicians on the other, it may not survive another year...even as the waiting list for new enrollees grows daily.

The state's health plan was set up in 1992, after the Democratic Party pushed both Bill Clinton and many local candidates to victory on a platform that included health care reform. The plan was meant to provide subsidized medical insurance for low income people who were not making enough to afford to buy health insurance, but who were making a little too much to qualify for Medicaid. In an effort to ensure the plan's success, the state accepted two types of enrollees: people who needed to have all or a portion of their premiums subsidized by the state, and higher income people who could join and pay the full cost of the premiums out of their own pockets. Today, subsidized members number over 200,000, while unsubsidized members number about 17,000.

Initially the waiting period to join was short and people could sign up at any time; private insurance plans, by comparison, typically designate one month per year as their "open enrollment period," which is the only time when people can join. In 1996, however, as national "welfare reform" kicked in and poor people were booted off of Medicaid, the uninsured population in Washington State swelled. Local businesses continued to cut benefits to their employees, while most job growth occurred in the low-paying service and retail sectors, which also provide no health care coverage for employees. In 1996 the number of people signing up for the state's plan more than doubled from 60,000 to around 140,000, placing a serious strain on public coffers. So, the state put a limit on the number of new enrollees for the subsidized plan and instituted a waiting list. By the end of 1997, there were over 60,000 people on the waiting list, while the plan covered over 200,000 people.

Then real trouble struck: during the state's 1997-98 legislative session, Republicans blocked all efforts to increase funding for the health plan, in spite of rising medical costs and increasing demand. This ensured that most people on the waiting list would have to wait yet another year for a chance to join the plan.

In the meantime, the Basic Health Plan has run into another huge problem: private insurance companies trying to make a profit from the state plan. Initially 18 separate insurance companies contracted with the state to provide benefits to plan members. By 1998 that number dropped to nine, mostly because of mergers, but also because insurance companies dropped out because they couldn't make enough profit from the state plan. Evidently, low income people tend to get sick a lot or have other chronic health problems; insurance companies call this "severe adverse selection" (i.e., too many sick people have selected the state's plan--never mind that nobody chooses to get sick in the first place). This cuts into their profit margins, and companies either decide to drop out of the plan or they raise their rates.

Just two weeks ago, two more insurance providers, Providence Health Care and QualMed, announced that they were dropping out of the plan, leaving only seven providers. The remaining companies are raising rates in 1999 by an average of 9% for the subsidized plan and a whopping 62% for the unsubsidized plan. Regence, for example, is upping its rate by more than 130%. To cover the increase, the legislature will have to find an additional $190 million next year.

The legislature, however, may decide to do away with the state health plan altogether; a lot depends on who gets elected or re-elected at the polls this November. If Republicans gain a majority in the state legislature again, we can probably say goodbye to the Basic Health Plan. A Democratic majority, on the other hand, will be open to "fixing" the plan, but this will likely involve paying private health insurers whatever they ask to keep them part of the process.

It's pretty hard to find a better argument for dumping health insurance companies in favor of a single payer plan. Unfortunately, we're more likely to see the death of the Basic Health Plan instead.