A high cost estimate for the continued use of the federal health exchange has led the Department of Consumer & Business Services to consider other options, but consumers and insurance brokers might have good reason to be skeptical of the state abandoning a smooth-running federal website for another state-based website.
Pat Allen, the director of the state agency, announced to reporters in a series of interviews this week that DCBS was issuing a request for proposals this month that will allow vendors to submit plans for replacing the federal website with a possibly cheaper existing state-based website. Proposals will be due to the agency in January, just in time for discussion in the February 2016 legislative session.
“We absolutely do not intend to hire someone to write code for us,” Allen said. “We want to find something that has been configured and does not need to be customized.”
Last month, Allen told legislators his agency would be soliciting proposals primarily out of due diligence so the state would know its options. While that remains true, the federal government has since come back to the state with a price tag for continuing to offer Oregonians its own website, and the cost is high enough that the state will likely have to do something different.
After the website for Cover Oregon failed to provide online enrollment, the federal government graciously allowed Oregonians to use the federal website without collecting an assessment.
But starting next year, the feds will slap Oregon health insurers with a 1.5 percent assessment on each 2017 plan sold on healthcare.gov, which insurers such as Moda or Providence will then spread across the cost of health plans to all consumers. For 2018 health plans, that assessment will increase to 3 percent -- roughly doubling the current assessment when the state’s own assessment is added in.
The state has continued to collect the assessment set by Cover Oregon -- $9.66 per plan per month, which is about 2.9 percent -- despite a much-diminished role for state-based exchange programming at a new division of DCBS. Allen said the state collects $12 million and the division plans to spend $10 million a year.
He said a 5.9 percent assessment would be unreasonably high, leaving the state to cut back on its assessment and programming, scrap the state’s involvement altogether, or leave the federal exchange for a different, existing exchange modeled after another state’s exchange. “I would want that to be a cost-effective choice. [Keeping healthcare.gov] would certainly be the easiest choice.”
State lawmakers could also bolster the exchange by charging the assessment on all individual health plans sold in the state, even those not sold on the exchange. The non-exchange plans are primarily purchased by those people too affluent to receive any subsidies from the exchange for an individual health plan.
“There are a number of states that charge an assessment for policies across the individual market,” Allen said.
Ain’t Broke, Don’t Fix It
The news that the state could be switching its exchange again did not go over well with Dan Neils, an insurance broker at Agape Insurance in Oregon City, who said he has enrolled 250 people on healthcare.gov since Nov. 1.
He said this year’s easy sailing was in stark contrast to the shipwreck known as Cover Oregon.
“The federal website is very efficient. It completely works. The renewal process is smooth, it has very few errors. I haven’t had it crash once in the past two months,” said Neils, who added that the state’s consideration of yet another new exchange platform would be an unattractive solution without a problem. “It’d be a disaster the first year. Everybody will have to re-enroll.”
Far from preferring the state abandon the federal government’s role, he wants Oregon to give up its vestigial participation with the exchange and turn everything over to the federal government.
Jesse O’Brien, the healthcare advocate for the Oregon State Public Interest Research Group, agreed that the state had its work cut out for proving that adopting another state’s exchange would be better for consumers than the federal website, but he was glad DCBS was considering all its options.
“We need to know what the tradeoffs are. It’s not something that’s gonna happen unless it’s a slam dunk,” O’Brien said. He said a state-run exchange would have to end up considerably cheaper than using the federal website, as well as show how the state could be more flexible by going that route. “Anything other than that is gonna be a hard sell.”
State Has Chance to Innovate
O’Brien said keeping the state involved with the exchange would be better than giving up all responsibility to the feds because it allows Oregon to offer unique programming like the proposed premium assistance program for uninsured Pacific Islanders.
O’Brien is most excited about the possibility that the exchange could use the clout of 100,000+ enrollees to put pressure on insurance carriers to offer more transparent plans and hold costs down. “It could pool the purchasing power,” he said.
The state's role in the exchange would also help it to enact Basic Health Plan regulations, which would push coordinated care delivery reforms further into the private commercial insurance market, something the federal exchange would be unlikely to consider, given the Oregon-specific approach of cost savings through coordinated care.
Chris can be reached at [email protected].