In Washington state, a healthcare repeal lesson learned the hard way

Republicans in the state of Washington didn’t wait long in the spring of 1995 to fulfill their pledge to roll back a sweeping law expanding health coverage in the state.

Coming off historic electoral gains, the GOP legislators scrapped much of the law while pledging to make health insurance affordable and to free state residents from onerous government mandates.

It didn’t work out that way: The repeal left the state’s insurance market in shambles, sent premiums skyrocketing and drove health insurers from the state. It took nearly five years to repair the damage.

Two decades later, the ill-fated experiment, largely relegated to academic journals, offers a caution to lawmakers at the national level as Republicans in the U.S. Senate race to write a bill to repeal and replace the federal Affordable Care Act.

“It’s much easier to break something,” said Pam MacEwan, who served on a Washington state commission charged with implementing the law in the mid-1990s and now oversees the state insurance market there. “It’s more difficult to put Humpty Dumpty back together again. … And that’s when people get hurt.”

The nonpartisan Congressional Budget Office echoed that warning last week, when it concluded that the healthcare bill passed by the House last month would destabilize insurance markets in a sixth of the country and nearly double the number of people without health insurance over the next decade.

Senate Republican leaders contend that their legislation will be different. “We're working to lower the costs and give people more personal, individual freedom,” Sen. John Barrasso (R-Wyo.) said last week.

Obamacare vs. Trumpcare: A side-by-side comparison of the Affordable Care Act and the GOP’s replacement plan »

There were similar assurances in the Washington statehouse when legislators there began to pull apart the Washington Health Services Act in the mid-1990s.

“We will do everything we can to stop the government healthcare bureaucracy that is now poised to limit personal choices,” Clyde Ballard, the Republican speaker of the Washington House of Representatives, said at the time.

The Health Services Act, which Democratic Gov. Mike Lowry signed in May 1993, was an ambitious effort to overhaul the state healthcare system by guaranteeing residents health insurance and putting new government controls on rising healthcare costs. It was designed to complement the national healthcare overhaul that President Clinton and First Lady Hillary Clinton were pursuing at the time.

Washington state prohibited insurers from denying coverage to consumers, even if they were sick, a revolutionary protection then.

A state commission was empowered to clamp down on insurance premiums to limit increases.

And to get all Washingtonians covered, the state became the first in the nation to both require residents to have coverage and to require employers to offer health benefits.

The law was controversial from its inception, as major business groups and insurers balked at its many new regulations. Just a few Republicans joined Democrats in the state Legislature to pass the legislation.

Within a few months, it became clear that there would be problems implementing it, in part because the state couldn’t secure necessary federal approval to require employers to provide coverage.

“We had to reform the reform,” said Phil Dyer, a Republican who would help lead the repeal effort as chairman of the Senate health committee.

GOP legislative candidates railed against the law on the campaign trail in 1994. And that fall, the party picked up 30 seats, taking control of the House and coming within one seat of taking the Senate.

When the new Legislature convened in 1995, GOP lawmakers set about pulling apart the law, bringing along Democrats who feared Republicans would repeal it through a ballot measure if they didn’t cooperate.

The hastily crafted repeal — which the Legislature sent to the governor in three months — kept some popular parts of the law such as the guarantee that everyone could get coverage, even if they were sick. It scrapped parts voters didn’t like, including the requirement that state residents have health insurance.

The state’s insurance market started teetering soon afterward.

First, health insurers sought a series of double-digit rate hikes in 1995 and 1996. The health plans warned that with no requirement to have coverage, people were signing up for insurance only when they got sick, sending costs skyrocketing.

Then, in November 1998, Premera Blue Cross, one of the state’s leading insurers, announced it would stop selling health plans, citing more than $100 million in losses. Regence and Group Health Cooperative, the state’s other two leading plans, quickly followed.

“This was a crisis,” former Gov. Gary Locke said in a recent interview. “It was totally unacceptable.”

Locke, a Democrat elected in 1996, brought together insurance executives, state legislators and others, who began meeting regularly to try to salvage the market.

The rescue effort took until 2000. That year, state lawmakers passed legislation allowing insurers to once again screen out sick customers and reestablishing a special government “high-risk pool” plan for those who couldn’t get health coverage because of a preexisting medical condition.

Even those who worked on the rescue package acknowledge it was an imperfect solution. When President Obama signed the Affordable Care Act in 2010, 1 in 7 Washington state residents still lacked health coverage, according to federal data.

Today, the uninsured rate in the state has been cut in half, thanks to the federal healthcare law.

Obamacare not only guarantees coverage, it requires Americans to have insurance. The law also provides federal money to help states offer Medicaid coverage to very low-income Americans. And it funds subsidies for low- and moderate-income people to offset the cost of private health plans they can buy on insurance marketplaces.

Washington’s Obamacare marketplace, which the state runs itself, has done better than most, though even its defenders acknowledge that more must be done to control premiums, which have risen dramatically for some consumers in recent years.

But many state leaders, including former insurance executives, caution that congressional Republicans rushing to roll back Obamacare risk sowing the same kind of chaos that crippled Washington state’s insurance market two decades ago.

“That’s what scares me,” warned Cheryl Scott, the former chief executive of Group Health Cooperative, who worked with the governor to rescue the market in the late 1990s.

“If we’re not careful, we are going to be repeating history.”

Obamacare 101: A primer on key issues in the debate over repealing and replacing the Affordable Care Act. »

noam.levey@latimes.com

@noamlevey

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