Kitzhaber Administration Takes Action on Health Care Costs
At the direction of Gov. Kitzhaber, the Oregon Health Policy Board has adopted an OSPIRG Foundation-backed proposal to address the rising cost of health care.
The new policies announced yesterday will require insurance companies—when they seek permission for premium increases—to first quantify their progress towards holding down costs and boosting preventive care that keeps their customers healthy in the first place. Going forward, insurers can be held accountable for this progress through considering key health outcome measures as part of Oregon’s health insurance rate review process.
“Studies show that a third or more of health care spending is wasted on things that do not improve health, so we know that action is urgently needed,” said Jesse O’Brien, OSPIRG Foundation Health Care Advocate. “We commend the Governor and the Oregon Health Policy Board for their efforts to make the commercial health insurance market work better for Oregonians.”
The new policies came after over 25,000 Oregonians from across the state demonstrated support for the Kitzhaber Administration’s efforts to hold health insurance companies accountable to cut waste and keep down costs in a citizen petition delivered by OSPIRG onOctober 1.
Under the Oregon Insurance Division’s (OID) rate review program, health insurers seeking to increase their rates on small businesses or people purchasing coverage on their own must submit a written justification. The OID then evaluates whether the proposal is reasonable and goes on to approve, disapprove or cut back the proposed rate. An OSPIRG Foundation report released in April 2013 outlined a set of recommendations to make the process a more effective check on health care costs for Oregon consumers and small businesses. Some of those recommendations were included in the Board’s proposals.
In addition to heightened scrutiny for health insurance rate hikes, the proposals include measures to make health care costs and the quality of care more transparent and available to the public, as well as a new initiative to explore strategies to bring health care cost growth down to a rate that will be sustainable for the long term. The Oregon Health Policy Board’s proposals will be implemented in stages over the coming year, with many details remaining to be determined.
“This action promises to bring some relief for Oregon families and small businesses are fed up with the cost of health care, but the devil is in the details,” said O’Brien. “We have seen that the public stands behind the need for strong, immediate action to bring down costs, so we urge state policymakers to take advantage of this opportunity to deliver meaningful results for Oregonians struggling with the high cost of health care.”
Background on Oregon’s health insurance rate review program
In 2010, new rules went into effect strengthening the standards that health insurance companies must meet before raising premiums. Insurers must justify rate hikes in writing, showing that they are not excessive and explaining how the insurer is working to reduce costs. All rate filings are public information, available online, and open to public comment. The Oregon Insurance Division evaluates these justifications, and must take public input into consideration. In 2011, the Insurance Division began to hold public hearings on significant rate increases.
Since these changes have taken effect, the Oregon Insurance Division has significantly stepped up their scrutiny of health insurers’ rate hike requests. Since 2010, it made cuts to a majority of requests, cutting over $155 million in waste and unjustified costs from consumers’ and small businesses’ premiums from 2010-2013.