A bill that many of us believe will do exactly the opposite of its title was given a green light from the House Appropriations Committee Wednesday. House Bill 1123, titled “Ensuring access to primary care, behavioral health, and affordable hospital services,” will do nothing of the sort. 

The state and its thousands of employees might enjoy lower costs of care for awhile by reducing state-paid reimbursements to providers and hospitals, but that will come at the expense of the rest of the state’s residents, commercial insurers, hospitals and providers. Eventually, it could come back to bite state lawmakers, too. 

More than a handful testifying at a public hearing on the bill Jan. 27 told the committee about the state hospital budgets being in the red and about the discontinued services and cost-shifting that could be expected if this bill becomes law. Since the bill got through its committee with a vote of 19-12 along party lines, watch out. It’s on the move. 

Chelene Whiteaker with the Washington State Hospital Association (WSHA) testified. She pointed out that hospitals in the state are experiencing continuously negative operating margins of -1.3% in aggregate. 

“When overall costs exceed payment, hospitals have two choices: Seek higher payment rates from commercial  insurers — the only payment rate that is really negotiable, or cut services,”  Whiteaker said,

She reminded lawmakers that our state already ranks 50th in the number of hospital beds per capita, and stressed that hospitals are not too big to fail. Two have closed their doors because of finances already, and others are cutting programs. This hurts rural communities especially hard.

Lisa Thatcher, also with WSHA, said that all patients, regardless of who is paying, get the same care in hospitals. However, government payers — Medicaid and Medicare — pay about about 20% of what it costs to provide that care. HB 1123 would impose price controls for health care services that government-insured people receive and that are linked to Medicare rates. 

Reduced patient reimbursements to hospitals and providers would begin in 2027 and reduce even further in future years. To cover those reduced payments for services received by state employees, hospitals would need to cost-shift  to commercial payers.

Expect insurance premiums to continue rising steadily for commercial payers after the slew of bills that this year’s legislators are considering. For all the talk in our state about hopes and dreams for “universal” health care and affordable health care for everyone, cost-containment strategies are something that should be “universal,” pursued by lawmakers for everyone. Instead, the state keeps picking winners and losers in the health care system: With HB 1123, lawmakers are trying to lower the state’s budget for the health care insurance it provides to its employees, but not the medical costs or budgets of you, me or the hospital behind the tree. 

Flawed reasoning

In the executive session where lawmakers voted for the bill to move on,  Rep. Nicole Macri, D-Seattle, said of the bill she sponsored, “I will say, this bill does not come without impact to our hospitals,” and then attempted to reason that the state and patients should only be paying for the cost of services delivered and no overhead.

“When you look at patient expense relative to patient revenue, we see that over a long period of time that our hospitals actually have a positive margin of about about 10 percent.” When you add operating costs that include things like buying clinics, renovations and building parking garages, she said, the margins lessen. “Those are choices that our health systems can make,” she asserted, adding, “The business decisions of our health system should not be put on the backs of  our school teachers and our public employees.”

Does she hear what she is saying? I did. Apparently, those costs should go to people who aren’t public employees and on the backs of private, not public, payers. 

Rather than seeking cost containment and affordability for all, lawmakers advanced a bill picking winners and losers. Lucky us, though — ? The bill, via amendment, will now include a costly study on the cost-shifting that could result. This is how the committee decided to deal with the concerns of everyone but state budget writers and public unions.

Rep. Joe Schmick, R-Colfax, sits on the committee and did his best to offer the common-sense danger of HB 1123. He urged his colleagues to join him in opposition to the bill. His Republican colleagues did. 

Schmick mentioned a story in The Spokesman-Review about how Washington state hospitals collectively lost $398 million during the first nine months of 2024, according to a survey conducted by WSHA. 

“I ask a simple question,” Schmick said. “Where are hospitals going to make this up?”

He continued, “I hope the services will be there when you need ‘em. … This will add to that $398 million loss.”