June 13, 2013 — The House passed a bill that will give the Department of Consumer & Business Services new tools to challenge health insurance rates, while giving consumers more opportunity to participate in the process.
“What we’ve done for the past four years is bring the public into the rate review process,” said Rep. Mitch Greenlick, D-Portland. “Our rates have been lower than if we had not brought the public in.”
According to the Oregon State Public Interest Research Group, the Insurance Division has cut $80 million in insurance waste by scaling back premium rate hikes since 2010. In Oregon, health and life insurers must submit rate changes for individual and small group employers to the division for approval.
Oregon has also seen its medical-loss ratio — the figure that depicts how much of a premium is spent on medical expenses — go up, indicating less money is being spent on administrative costs such as salaries of insurance executives.
Senate Bill 413 directs DCBS to develop a standardized and objective measure of medical inflation by 2015. The agency also needs to partner with the Oregon Health Authority and assess how well insurance companies are imposing cost controls on providers such as physicians and hospitals.
The last thing the bill does is require insurers to notify consumers annually in writing during the rate review process, making them aware of the DCBS rate website, http://www.oregonhealthrates.org. Insurers can also inform their members about how to sign up for electronic notifications from DCBS.
OSPIRG praised SB 413 in a floor letter it sent to representatives:
“Making it easier for Oregon small businesses to receive notice of rate requests will not only enable greater participation, but will help provide employers with important information about trends in costs that will help them plan for the future,” according to the letter. “Oregon has shown that a strong and transparent rate review program can make a difference in containing costs, and it is time to take the next step.”
Most Republicans opposed SB 413, including Rep. Jason Conger of Bend, who led the party’s opposition on the floor.
“I don’t oppose the spirit of this,” Conger said, while dismissing the ability of DCBS to rein in rates the way that Greenlick anticipated. Conger also questioned the value of public participation: “I don’t know how to do a rate review process. I’m not an actuary.”
The average consumer may not have actuarial knowledge, but the spotlight of public participation can force insurance companies to do a better job keeping rates fair. California, which does not have prior approval of insurance premiums, has seen insurance companies lower proposed rate hikes after public outcries.
The vice-chairman of the Health Committee, Rep. Jim Thompson, R-Dallas, voted for SB 413, but switched his vote on the House floor.
“I didn’t mind getting it out of committee for further discussion. I didn’t think they made their case,” Thompson told The Lund Report. “Some of these bills depend on how much you want to trust DCBS. … Insurance law and insurance regulation has gotten so complicated. I don’t know how we’ll ever sort it out.”
The consumer notice section of SB 413 strikes at its original intent when it was introduced by Sen. Chip Shields, D-Portland, in February. Shields wanted insurers to notify consumers directly when requesting rate requests above 7 percent.
His efforts were quashed when Sen. Laurie Monnes Anderson, D-Gresham, asked that a bill preferred by Regence BlueCross BlueShield be passed instead. The Regence bill, which passed the Senate, only required insurers to notify consumers of the DCBS website at some point during the year. That would have meant consumers might not have been told about a rate hike until months after it had been approved.
The House version of SB 413 had the backing of the Service Employees International Union and OSPIRG. Felisa Hagins of SEIU and Jesse Ellis O’Brien of OSPIRG worked to amend the bill after they were disappointed with the outcome in Senate.
Shields has told The Lund Report that he will ask the Senate to approve the House version, he may have trouble getting enough votes without a conference committee. He would need to find a Republican supporter if Monnes Anderson decided to oppose the enhanced House version.
Three House Republicans did support SB 413 — Rep. Greg Smith of Heppner, Rep. Bob Jensen of Pendleton and Rep. Dennis Richardson of Central Point.
At least two other Republicans — Rep. Wally Hicks of Grants Pass and Rep. Vicki Berger of Salem — supported the bill before switching their votes at the direction of House Minority Leader Mike McLane of Prineville.
Christopher David Gray can be reached at [email protected].