Bills on medication costs, prior authorization, health insurer surpluses get small business backing
State Director Patrick Connor reports from Olympia on the small-business agenda for the legislative week ending February 2
February 2 was the deadline for bills to pass policy committees. Accordingly, much of this week’s legislative action was confined to amending and approving bills.
Health Care
- NFIB testified in support of Senate Bill 6147, which would limit health insurers ability to increase the cost of certain medications mid-plan-year. These unexpected price increases can force patients to skip doses, split pills, or simply stop taking essential medications. In some situations, this can lead to hospitalization, missed work, lost productivity, and other disruptions to employment and family life. NFIB pointed out that unless insurers are willing to pass along savings to consumers when the price of drugs goes down, they ought not to be able to increase the cost on policyholders when the drug costs they negotiate go up.
- Similarly, NFIB testified in favor of Senate Bill 6157 to reduce delays from prior authorization requirements when individuals try to use a portion of a limited benefit for chiropractic care and various therapies (eight visits of 12 allowed during the year, for instance). Workers with minor muscle strains, sprains, and other pains are often able to get same day treatment, or an appointment that same week, with a chiropractor, massage or physical therapist, limiting the time they are off the job due to these issues. Quick access to effective treatment is an essential component of a healthy workforce.
- NFIB also testified in support of Senate Bill 6416, authorizing the state insurance commissioner to consider health insurer surpluses during the rate-setting process. Five years ago, Commissioner Mike Kreidler testified that health insurance premiums had doubled during the five years prior, and sought this authority when the three largest nonprofit insurers held a combined $2 billion in surplus. Today, rates for many policyholders have doubled again since 2013 – premiums increased by one-third for most plans just last year alone – yet these three carriers have also doubled their collective surplus to nearly $4 billion. These surpluses are in excess of all actuarily required cash reserves needed to pay the cost of claims into the future or to ensure solvency. We also noted that Commissioner Kreidler testified that his Oregon counterpart, who has this review authority, was able to reduce rates by as much as nine percent. At no cost to policyholders or insurers, we might add. Conversely, Commissioner Kreidler this year is asking the Legislature to impose a $200 million-per-year tax to fund a health reinsurance program with the hope that it might reduce rates by 10 percent. Additional oversight at no cost that has proven to reduce rates seems superior to a $200 million annual assessment that has no guarantee of lowering rates at all.
Labor
- The House Labor Committee approved a substitute to House Bill 2820, which originally sought to require a designated “healthy relationship star” at every business who would provide information to coworkers about domestic violence and sexual harassment. Based on concerns NFIB and others raised, Rep. Gina McCabe, the bill sponsor, asked the committee to amend the bill to instead establish a work group to learn more about the issue and recommend ways to improve education and resource availability to workers experiencing these types of situations. NFIB is named as a task force member.
- NFIB opposed Senate Bill 6110, the senate “Ban the Box” bill, in testimony before the Senate Ways & Means Committee. Given this was a hearing on the fiscal impact of the legislation, NFIB noted the attorney general’s estimated cost to educate state agencies about the new requirement and pointed out that small businesses generally do not have human resource departments, let alone in-house legal counsel, to walk them through these types of personnel mandates, or to defend them in court or before an agency investigator if they make a mistake.
- The Senate Ways & Means Committee also heard NFIB testimony supporting a minor change that would allow separate calculations between the State Fund and self-insured employers in our state’s workers’ compensation system. Senate Bill 6393 is L&I requested legislation that has support from business and labor, large employers and small business. There is no opposition.
Tax and Fiscal
- NFIB was pleased to support Rep. Laurie Jinkins’ House Bill 2730 – Small business B&O credit for worker education assistance. The bill would allow a limited number of firms with fewer than 50 employees to receive a dollar-for-dollar B&O tax credit for providing up to $5,000 financial assistance to employees enrolled in higher education, vocational, and technical programs. The program would be capped at $500,000 in aggregate credits per year.
- NFIB also supported Rep. Kristine Lytton’s House Bill 2940 – Small Business Tax Fairness Act, which would allow businesses to deduct the cost of goods sold and payroll expenses from gross earnings to determine whether they owe B&O tax, and at what tax rate. Firms with an adjusted margin under $125,000 would be exempt from filing, unless they collect sales or other taxes from customers. Businesses with an adjusted gross below $250,000 would pay ZERO B&O tax. Firms with adjusted margins between $250,000 and $1 million would be taxed at the current B&O rates. Firm earning $1 million or more would see their B&O tax rates increase by six percent (from 1.5 percent to 1.59 percent for service B&O, for example). Rep. Lytton’s Small Business Day comments described a slightly different application of the deductions than we understood from our reading of the bill. NFIB is investigating further to ensure we are providing our members with correct information from which to finalize our position on the bill.
Next week fiscal committees will consider bills from policy committees that would increase state spending or revenue. Once the February 6 fiscal cut-off deadline passes, bill consideration will move to the floor of the state House and Senate.
Small Business Day a Huge Success
Small-business owner from all over Washington attended NFIB’s annual Small Business Day, February 1 in Olympia. NFIB thanks its guest speakers, listed in order of their appearance, who took time from their busy session schedules to meet with the entrepreneurs who are the engine of the state’s economy:
- Rep. Kristine Lytton spoke on her bill to reform the B&O tax
- Jason McGill, Gov. Jay Inslee’s senior health policy advisor, spoke about the opioid crisis’s effect on small business
- Sen. Curtis King spoke about the importance of bipartisanship
- Sen. Shelly Short gave an update on the Hirst fix
- Liz Smith and Tammy Fellin, from the Department of Labor and Industries, discussed complying with the state’s paid leave laws.
- Sen. Guy Palumbo, the luncheon speaker, apprised attendees about the carbon tax.
Catherine Michael, NFIB’s vice president of public affairs, and Tim Goodrich, NFIB’s director of state public policy, also game informative presentations.
Previous Reports, News Releases, Editorials
January 26 Report—Take the Proposed B&O Gross Marginal Revenue Tax Test
January 24 News Release—Small Business Owners to Gather in Olympia, February 1
January 19 Report—Phantom Legislation, Hirst Fix Highlight Week in Olympia
January 13 Report—Dead Bills Return From the Grave
