What is driving the cost of health care?

What is driving the cost of health care?


The Affordable Care Act gets underway in earnest starting next January, and Oregon is leaping ahead of most states to comply. The federal government granted the state $226 million to set up Cover Oregon, a health insurance exchange that will initially serve only the individual and small group markets. It intends to enable small companies to offer employees various levels of choice to shop for the plan they prefer. Cover Oregon will coordinate payment of premiums between the employer and the mix of plans selected. In April the Obama administration announced that states could delay the rollout of small-employer exchanges until 2015, but Oregon’s exchange will be implemented as planned next year, according to Lisa Morawski, Cover Oregon’s communications manager.

Oregon has also moved swiftly to approve 15 coordinated care organizations (CCOs) to serve Oregon Health Plan and Healthy Kids plan members in 90% of the state. CCOs are networks of doctors, therapists, dentists and other professionals who have banded together to ensure local at-risk patients get effective treatment for chronic illnesses, receive preventative care and avoid the emergency room.

Although CCOs are designed to reduce costs, other ACA provisions could initially raise prices in the individual insurance market. That’s because the law will remove pre-existing conditions as a reason for denying coverage and mandate expansion of benefits, such as covering prescription drugs, and mental health services, and providing preventive care without a copay or deductible. Premiums for older plan members must be no more than three times those of younger members, lowering costs for the old but probably raising them for the young. Federal premium tax credits will offset some of the cost increases.

Even as state and national reforms move forward, it’s impossible to say whether these changes will meet their dual goals of delivering quality care to everyone while controlling costs. More than most states, Oregon is on a path to do just that. But for now, cost shifting, expensive technologies and the demands of an aging population continue to place an untenable burden on the state’s health care system.

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Brandon Sawyer is research editor for Oregon Business. You may reach him at brandons(at)oregonbusiness.com.">brandons(at)oregonbusiness.com.