“I’m hoping to be one of the exchange’s first customers,” says Jose Gonzalez, a Salem realtor and member of the Exchange Board. But, he says, keeping health-care costs down is also a matter of “personal responsibility.”
// Photo by Randy Johnson
Small-business and consumer advocates raise their own concerns about affordability and accessibility. Outreach to rural and minority communities will be a challenge, says Gonzalez. He would also like to see the small-business tax credit expand to businesses with employees making up to $75,000. “We hope no business is priced out because they want to attract good employees,” he says.
Back to the million-dollar question. Will the exchange help control or drive down the cost of health insurance? That has yet to happen in Massachusetts or in Utah, where small-business insurance inside the exchange is actually more expensive than outside. As for Oregon — in October, the consumer advocacy group OSPIRG released a nationwide study of exchange initiatives, ranking the Oregon law a B minus. One weak point, says Laura Etherton, OSPIRG’s health policy advocate, is “the legislative language failed to direct the exchange to lower costs.”
The exchange will eventually have an impact on cost, just not directly, King and others respond. That’s in part because because federal law requires identical plans sold inside and outside the exchange to have identical premiums. Also, as King points out, the Oregon Insurance Division must approve all health-insurance rates and increases. As a result, Oregon already boasts “the most robust rate approval process in the nation,” according to King. What’s more, Oregon isn’t Kansas, which is one of several states that has only one small-business carrier. About seven carriers serve Oregon’s small group market.
In short, since Oregon is already home to a competitive yet heavily regulated insurance market, the exchange on its own is unlikely to bring prices down. Why isn’t that a deal killer? Contrary to popular opinion, says King, the reason insurance rates are increasing 5%-10% a year isn’t because carriers “are taking the money and pocketing it.” Instead, he says, “service delivery reforms” are the key to controlling health-care expenses.
Unlike Massachusetts and Utah, Oregon’s exchange is not unfolding “in a vacuum… but is part of a whole chain of things happening to address quality and cost,” says Christofferson. One is the development of a new health-care model called the Coordinated Care Organization, which will integrate physical mental and dental services for more than 600,000 Oregonians under the Oregon Health Plan. Subject to approval by the Legislature, the first CCO would launch next July, with a projected savings of $239 million next biennium. Then there is the “health-engagement model,” a pilot available through the Public Employees Benefit Board, linking health coverage to behavioral changes by the participant.
As these and other new initiatives get established, King says, the goal is to fold them into the exchange, where application on a larger scale will further reduce the cost of care. In 2016, the exchange will be open to businesses with 100 employees, and in 2018 to firms with more than 100 employees.
But first things first. “Coming out of the box, with zero enrolled, we can’t negotiate,” King says. “Once I get 300,000 lives in there, we’ll have leverage to move the market.” According to Sabrina Corlette, a research professor at the Health Policy Institute and Georgetown University in Washington, D.C., Oregon is “at the vanguard of the rest of country” precisely because officials are thinking about the exchange “as a mechanism to get delivery system reforms.”
But whether enough businesses and individuals will enroll, whether federal health law will be overturned, and whether the exchange will languish as little more than a web portal, are the uncertainties clouding the future. In that regard, Chris Ellertson, president of Health Net Health Plan of Oregon Inc., speaks for both insurance carriers and purchasers when he says: “We believe there’s going to be some good that comes from the exchange. But there are a lot of question marks, a lot of things that are hard to predict.”
Linda Baker is the managing editor of Oregon Business. She can be reached at lindab(at)oregonbusiness.com.