Health Insurance Exchange Faces 2011 Legislature

Governor-elect John Kitzhaber will ultimately decide if health industry representatives can sit on its board


December 15, 2010 – Oregon’s Health Policy Board took a giant step toward creating a health insurance exchange on Tuesday, drafting legislation for the 2011 session.
Such an exchange, required by the Affordable Care Act, has the potential to reduce costs, improve quality and give consumers and small businesses a more efficient way to purchase insurance coverage starting in 2014.  
In 2009, Oregon’s legislature took the first leap, directing the Oregon Health Authority to develop an implementation plan by the end of this year. The exchange will be similar to a public corporation such as SAIF Corporation and Oregon Health & Science University.
“The strategy is to treat the exchange like a big purchaser to negotiate a better deal for people and help drive out waste and improve quality at an economic time when people can ill afford the skyrocketing insurance increases,” said Laura Etherton, health care advocate for OSPIRG. 
Its governing board will have authority over negotiating the premiums, the benefit designs and any other requirements for health insurers to participate.    
California has a very strict conflict of interest policy. No one from the healthcare industry -- insurers, physicians, hospital officials, brokers and consultants – can serve on its governing board.
Oregon should adopt similar rules, suggested Nora Leibowitz, development director with the health insurance exchange, which is housed in the Oregon Health Authority,
Etherton agrees. “There shouldn’t be any exceptions to the conflict of interest provisions,” she said. “When Intel gets together to negotiate with a big insurer, surely they don’t include a representative from the selling party on their decision-making board. There definitely needs to be expertise there from a range of fields, but that person doesn’t have to come from the insurance industry.”
But Nita Werner, who sits on the Health Policy Board, believes otherwise. “Unless there’s representation from the industry,” said Werner, president and CFO of Ornelas Enterprises in Hillsboro, “there’ll be no one left who knows anything about health insurance. We need someone with a little expertise. I don’t think drawing a salary make you biased one way.”
There could be unintended consequences, said Dr. Joe Robertson, president of Oregon Health & Science University. “The board will be setting up what will drive a major portion of healthcare delivery without anyone involved who’s been in the room.”
However, if an insurance executive sat on that board, “how would the public and others insurers who are their competitors perceive that?” asked Barney Speight, director of healthcare purchasing for the Oregon Health Authority. “There are a vast number of people who know how the system works other than insurers, brokers or agents.”
To reach a compromise, the Health Policy Board agreed that a majority of the Health Insurance Exchange Board cannot represent the industry, and recommended that the governor, who will select the members, choose two people from the healthcare sector. All together, nine people will serve on the board, but three people will be ex-officio members and represent the Department of Human Services, the Department of Consumer and Business Services and the Oregon Health Policy Board. Six will be appointed by the governor and subject to Senate confirmation. 
“It’s really important that this be an operating board, and the legislature will have to confront the issue of balance,” Speight said. “It needs to be large enough to give appropriate representation and small enough to take relatively quick action on high priority business issues.”
Four advisory groups will also be set up representing insurers, providers, consumers and small businesses.
“It’d be a mistake to put health plans and providers in the same group,” said Dr. Chuck Hofmann, a general internist from Baker City. “It would be easier to manage that group than to throw them in with insurers.”
“These groups will be able to flush through to the deeper issues, going in depth looking at the costs and the delivery of care models,” Etherton said.
When the exchange gets under way in 2014, roughly 142,500 individuals and 65,000 small business employees are expected to participate with federal tax credits available. An estimated 150,000 previously uninsured individuals will gain coverage by 2019.

For more on the health insurance exchange click here.


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