Insuring low-income employees through state subsidies: An evaluation of the Washington State Health Insurance Partnership (HIP)

The Health Insurance Partnership (HIP) was established by the Washington State (WA) legislature to create a small-business health insurance exchange that offers subsidized and unsubsidized health insurance to employees, and their families, of small employer groups that do not offer health insurance and the majority of whose employees are low-wage. Insurance coverage through HIP became available January 1st, 2011. This evaluation is a qualitative analysis of the structures, processes, and effectiveness of HIP. The evaluation utilized several key resources, including a comprehensive literature review, prior reports, modeling, and internal documents. The evaluators designed a logic model for HIP's effectiveness, including subsidy structures, plan options and their premium levels, employer contributions and employee take-up, and WA health insurance market structure. The evaluation focused on 7 outcomes: appropriate employer targeting; alignment with federal health reform priorities; access to health services; affordability; adequate and appropriate plan choice; value to both subsidized and non-subsidized employees; and transparency and sustainability. The evaluators also participated in HIP Board meetings, technical committees, broker trainings, and undertook key informant interviews. The designated health plans are available through 4 of the 5 major WA carriers, have 4 tiers of actuarial value, and are a subset of plans available through the existing small-group WA market. HIP offers premium subsidies of 60-90% of monthly employee premiums, based on selected plan tier levels and employee income. Employers are required to contribute 40% of premiums to purchase coverage through HIP. Employers must not offer health insurance immediately prior to signing onto HIP and can have 1-50 employees. HIP hopes to enroll 650 subsidized participants by the end of 2011 and around 4,500 by the end of 2013. Currently, HIP has received 120 initial employer agreements, 5 completed employer enrollments, and insures 20 subsidized persons. Proper incentives and lower costs for the participants through HIP will improve access to health services, although concerns remain whether HIP and its monthly premiums will be affordable to low-income workers. For example, one simulation indicated that some participants in HIP may face average premium costs that are above the 2.0% of income recommended under the Affordable Care Act. HIP contains a nuanced and transparent balance between neutral risk selection, modest carrier competition, and limited plan choice. With strong support from key public and private stakeholders, HIP-like exchange structures promise to enhance risk protection, access, and value in a challenging economy.