To reform the health care system by creating a connector. The bill also creates the Washington State Health Insurance Connector Board to develop and approve policies necessary for operation of the Washington State Health Insurance Connector.   Official Text and Analysis.

To limit the insurance markets that are required to be offered through the Connector to small group and association plans. The Board will establish procedures to include the individual market, Washington health insurance program, basic health plan, and state and K-12 employees in the Connector after January 1, 2012. The Board membership is reduced from 14 to 12, and health carriers are allowed to serve on it. The maximum number of health benefit plans that may be offered is increased from five to six, and the Board is given greater flexibility in designed health benefit plans that range from catastrophic to comprehensive coverage. The Board may offer a limited health care service plan for dental services. The Board is directed to develop a risk adjustment system. The basic health plan will not transition into a premium assistance program through the Connector until 2012. Commissions will be paid to associations as well as brokers when an eligible small group enrolls in the Connector. The reinsurance program operated by the Office of the Insurance Commissioner is removed. The use of the standard health questionnaire is required for individuals applying for nonsubsidized enrollment in the basic health plan.

To create the Washington Health Insurance Partnership (WHP) rather than the Connector. The substitute bill also creates the WHP Board and removes provisions in the recommendation from the Committee on Health Care and Wellness related to the nonsubsidized Basic Health Plan.

To authorize health carriers to offer a health benefit plan with a limited schedule of covered health care services. Annual rate adjustments for each small group health benefit plan may vary by eight percentage points from the overall adjustment of a carrier's entire small group pool, instead of four percentage points. Health savings accounts will not be included in the adjusted community rates that pool the medical experience of all small groups purchasing coverage.

To move the date when health benefit plans will be offered, an open enrollment period will take place, and the apparently successful bidder will be notified back six months.

To provide a B&O tax exemption for small businesses that offer health coverage for their employees.

To allow small employers to purchase health benefit plans through the small group market or through the Washington health Insurance Partnership.

To rename the current SEHIP program, established in statute in the HCA, the Health Insurance Partnership to serve small employers, effective September 2008. The Partnership will provide a premium subsidy for low-income employees with income below 200 percent FPL. Creates a 9-member Health Insurance Partnership Board, appointed by the Governor, by June 2007, to include representatives from: two small employers; two employees of small employers including one low-wage employee; four health benefit specialists; and the HCA Administrator. The Board will designate the health plans eligible for premium subsidy, from plans available in the private small group market, approved by the OIC. They must include at least four plans, with multiple cost-sharing and deductible options, and plans will range from high deductible/catastrophic to comprehensive. Designated plans must include innovative components, such as preventive care, chronic care management, wellness incentives, and payment related to quality of care. The Board will determine a mid-range plan that will be used as the benchmark for the premium subsidy, and the premium subsidy will be developed similar to the sliding scale used for Basic Health. The Board will determine minimum employee participation requirements and if there should be a minimum employer contribution; employers continue to determine employee eligibility and their contribution (above a minimum if established). The Board will evaluate rating methodologies, and impacts on applying small group market rating within a partnership, and consider options to manage carrier uncertainty through risk adjustment, reinsurance, or other mechanisms. The Board may authorize a dental plan be offered, but no subsidy will be available. Enrollment in the Partnership is not an entitlement, and enrollment may be limited to available funding. By December 1, 2008, the Partnership must report to the Legislature and Governor on the risks and benefits of incorporating the individual and small group markets into the partnership; and by December 1, 2009, the Partnership must report to the Legislature and Governor on the risk and benefits of incorporating the high risk pool, Basic Health, Public Employees Benefits Board, and public school employees, as well as the impact of requiring all residents over 18 to be covered. The Office of Insurance Commissioner is required to contract for an independent study of health benefit mandates, rating requirements, and insurance statutes and rules to determine the impact on premiums and individuals' health. An interim report is due December 1, 2007, and the final report is due December 2, 1008. The JLARC study of SEHIP due Dec 2009 is repealed.

To make the following changes: clarifies that participation rules for employers must be consistent with insurance laws for small employers; directs the agency to explore on-line employer guides for outreach; the Health Insurance Partnership Board and the benefit mandate study are made to be conducted by the Office of Insurance Commissioner contingent upon appropriations; and amends the title.

To insert the "connector" study from SB 5930, modify the benefit requirement for SEHIP and allow premium assistance for any small group product including an HSA, eliminate the Partnership modifications, the two Partnership studies and the benefit mandate study, reverts to the original House Bill title.

To provide that low-income employees that have come from employer-sponsored insurance must wait six months for state sponsored premium assistance.

To modify the Partnership Board from 9 members to 7, and changes the membership, deleting representatives of small employers, employees of small employers and four benefit specialists, and replacing the positions with persons with expertise in the insurance market and benefit design.

To strike the original language and insert new language regarding health insurance.