Senate Passes Exchange Bill
Two Democrats vote 'no' signaling shaky road to House
April 25, 2011 -- The Oregon Senate passed legislation today to create a health insurance exchange without the vote of two Democrats and three Republicans. The bill heads next to an equally divided House.
Senate Bill 99 passed the Senate Monday with 24 votes in favor and one excused. Sen. Suzanne Bonamici (D-NW Portland/ Beaverton), who voted ‘no’ said she strongly supported forming a health insurance exchange, but she had misgivings about certain portions of the bill.
“Small business and individuals will be paying the premiums, but unfortunately it’s lost the support of many of them,” Bonamici said on the floor. “They want it to do something very reasonable, which is negotiate for lower cost.”
Bonamici said the bill prohibits the exchange board from bargaining for lower premiums.
“I hope this comes back from the House in a form that we can all support,” she said.
Sen. Jackie Dingfelder (D-Portland) was the other 'no' vote from a Democrat.
Sen. Chip Shields (D-North Portland) voted ‘yes’ but said he too was unhappy with a provision he characterized as “tying the hands of the board” to negotiate for lower premiums.
Sen. Alan Bates (D-Ashland) defended the bill as a bipartisan compromise. He said the state already has a mechanism for negotiating with insurers through rate review under the Department of Consumer and Business Services.
“The bill doesn’t say the exchange can’t negotiate. It says each company must be treated equally and fairly,” Bates said. “I believe in competition, but when we have more than 100 plans, how they can start negotiating with them is something beyond the scope of the exchange.”
Bates said the exchange won’t be a panacea to what ails the healthcare system, but it could potentially lower premiums by 10 to 15 percent due to current cost shifting that could reportedly be eliminated with an exchange.
Bates also addressed the inclusion of insurance broker commissions that would be paid through the exchange as a substantial reform of the current system of compensating agents. But it wasn’t a detail that drew much support from consumer advocates that wanted brokers left out.
“I’ve got all my friends unhappy with me and all my enemies are unhappy with me,” Bates said. “The bill is probably just about right.”
If Oregon doesn’t pass a bill to create its own exchange, the federal government will impose one.
“My biggest worry is this goes to the House and dies and we are stuck 18 months from now with a federal exchange we can’t make work in this state,” Bates said.
Rep. Mitch Greenlick (D-Portland) who heads the House Health Care Committee had made overtures toward strengthening the exchange bill, but indicated to The Lund Report last week, he will probably back off.
Beginning in 2014, individuals and small businesses with less 50 employees will be able to purchase health plans through the exchange. It will determine eligibility for federal and state subsidies while serving as the single point of entry for multiple government programs. Starting in 2016, businesses with up to 100 employees will be able to buy coverage through the exchange.
The goal is to create a uniform playing field to compare insurance coverage equally on the basis of cost and performance, offer greater freedom of choice, as well as share risk across the entire market. The bill also calls for an advisory panel and an oversight board made up of legislators.
The legislature must sign off on a final business plan for the public corporation that will administer the exchange at its legislative session in February. Sen. Frank Morse (R-Albany) called this a feedback loop.
“This bill ensures a level of accountability not realized in any past major legislation to come before this body,” Morse said.
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Adding another committee on top of another does not equal savings in any business world. Why does it take 10 people to screw in one light bulb. Eliminate at the top and costs will lessen at the bottom. OEBB is an administrative adujunct, which has failed at reducing insurance costs to the Oregon Educators. Now another adgency is created to govern it and the infusion of Obamacare. Really.. since OEBB began my insurance has gone up 100% double and my coverage has declined to the point I opted out to an HSA account till I could recieve coverage at a lower rate and superior coverage through my husbands plan. I questioned OEBB why they could not provide Aetna, their answer was Aetna did not respond when they were approached by OEBB to be a contributor. Also I was told, that they could not switch carriers year to year because that would drive the costs up administratively. They must stay at least 2 years with selected carriers even though rates were up and coverage was cut back. So why do we need OEBB? Because it is required by law. Oregon legislated and passed a bill, that we the people by law MUST buy health insurance through OEBB. Our human resource dept. could do better I believe without the extra agency costs, i.e. payroll, building, lights, receptionist....ect...This is ludicrist.
80%+ of the cost of insurance is around providing care. If we are looking for the biggest bang for the buck lets concentrate on lowering the cost via attacking the cost of care. Look at things like Malpractice insurance (look what happened at OHSU when the ceiling of $300K was lifted a couple years ago) or for profit MRI centers (who make money by getting as many patients through their machine, whether it is a necessary procedure or not) and the like. To control health care costs you must focus on the entire spectrum of care, including dealing with patients behaviors (weight, smoking, high risk sexual activities, etc...).
The current “Health Care Reform” AKA health insurance reform (OR SB 99)will cost up to 5% of premium to run thus adding costs to the system.
Per the State of Oregon, Health Insurance in Oregon report, Oregon health insurance companies have netted a profit of 1% last five years, with an administrative expense ratio of under 10%, AND returned 1% back into the system after investment gains on surplus. Do you really think there is room for "negotiating rate"? IF the exchange negotiated rate, and they can, just on an equitable basis, they'd be negotiating below cost, at the expense, or subsidy of any plans outside the exchange. Just because the insurance is expensive, doesn't mean it's fraught with waste.
We are a society who can and will demand to have every health issue treated fixed if possible. We are living longer, and have more available and utilized to cure so much of what can ail a person, and THAT comes at a cost. Fix THAT, you reduce the cost of the system.
When people talk about negotiating with insurers, what they really mean is limiting exchange participation to only the best plan for a given coverage/cost share level. The benefit is that by restricting the number of plans, each plan will have more enrollees. More enrollees means economy of scale in both capital and administration, and leverage when negotiating with providers. Those factors, especially the latter, translate into lower premiums.
Without additional premium negotiation power, to drive system cost reductions in both the insurance and delivery systems, the exchange will be a much less powerful tool for needed changes. Pushing in agent commissions, when educational features and tight benefit standards would mean consumers could use the exchange independently, just further institutionalizes an important added cost in Oregon's market.