Legislature Unleashes $934 Million Health Deal for OHP, Insurance Market

Oregon state officials finally released their $934 million package to eliminate the budget hole for Medicaid and the Oregon Health Authority, raising about $520 million in taxes and restarting a reinsurance program to stabilize the individual health insurance market.

The taxes and reinsurance program would be good for two years, expiring in 2019.

The package appears to have the support of the Oregon healthcare industry, which would benefit from a more stable insurance market and $5 billion in federal funds coming into the state for Medicaid -- if Oregon can hold up its end of the bargain.

Medicaid is a state-federal partnership of which Oregon must fund about 25 percent of the cost.

“It would avoid a major step backwards in reducing the uninsured,” Jeremy Vandehey, the healthcare adviser to Gov. Kate Brown, said at the hearing late Thursday afternoon. “Everyone is going to have to take a responsibility in this.”

The largest source of funds for the Oregon Health Plan will come from restoring an assessment on health insurers and coordinated care organizations that expired in 2013. The new tax will be set at 1.5 percent and raise $205 million for Medicaid and $136 million for the reinsurance program.

The reinsurance program will raise costs for employer-based insurance, but lower rates on the individual market by nearly 5 percent by allowing health insurers to dip into the fund to pay their costliest claims.

Pat Allen, the director of the Department of Consumer & Business Services, said that while businesses are unlikely to enjoy this new tax, they would benefit from keeping the individual health market afloat. He said if the market were to collapse, their rates would sharply rise.

The U.S. Department of Health & Human Services under Secretary Tom Price has also aggressively encouraged states like Oregon, Alaska and Minnesota to request a waiver for the reinsurance program, since the reduced individual rates will mean the federal government can save money that it uses to subsidize private insurance.

The tax package, House Bill 2391, will also raise the hospital tax for large hospitals from 5.3 percent to 6 percent and set a new tax for small hospitals at 4 percent. The small hospitals will get an enhanced Medicaid reimbursement rate, but the large hospitals will not get a new enhancement for the 0.7 percent increase.

The increased tax on the large, diagnosis-related group hospitals, will raise $120 million over two years while the tax on the smaller rural hospitals will raise $90 million for the program. Oregon Health & Science University is being taken out of the assessment program and will instead pitch in $105 million to support the Oregon Health Plan.

In addition to the new 1.5 percent premium assessment that CCOs will have to foot, the state will also save $36 million by cutting their reimbursements -- pulling roughly $144 million out of the system in state and federal funds. Rather than the 3.4 percent annual growth rate, they’ll have to make do with an increase between 2 and 3 percent.

The Oregon Health Authority will also take $71 million in cuts, and the package includes a $139 million increase to the Oregon Health Plan paid through existing general fund revenues.

Steiner Hayward Carries Water for Saxton

As with everything that comes out of Oregon state government, any of these numbers need to be taken with a grain of salt and the actual numbers will probably be far different from what’s budgeted.

The Oregon Health Authority has likely been forfeiting $100 million to $200 million a year in federal funding by failing to adequately enroll people in the Oregon Health Plan and marooning patients in its open-card system, rather than expediting the enrollment process and getting them in a CCO immediately, which can draw a monthly premium.

Late in the discussion, Sen. Elizabeth Steiner Hayward, D-Beaverton, indicated that she would entrust the leadership of the Oregon Health Authority to fix its own failures in keeping people enrolled in the Oregon Health Plan and routing them to CCOs.

She said they would add a “key performance measure” in the OHA budget, but brushed off concerns from Coalition for a Healthy Oregon president Phil Greenhill that OHP enrollment as well as CCO enrollment was down 10 percent because of agency’s terrible renewal process.

“Give us the right on the CCO level to enroll people. Let’s go back to using DHS case workers,” Greenhill suggested. “I’m losing 9 percent of my members. We think they’re trapped out in that open-card market.”

The Oregon Health Authority under Lynne Saxton has relied upon mailing Oregon Health Plan members a tedious 30-page document to fill out  if they want to keep their health benefits. Many of these people are homeless, functionally illiterate or have a different first language than English.

Predictably, the majority of them fail to renew each month, and only 15 percent have navigated this gauntlet to actually keep their coverage continuously, while about 25 percent lapse temporarily in coverage. Overall, Oregon Health Plan enrollment is down about 10 percent over last year.

Yet Steiner Hayward repeated Saxton’s argument that most of these people were being dropped from coverage because of the improved economy.

The Oregon Health Authority has also kept 147,000 people out of the CCOs who would be eligible by sidetracking them to the own open-card system, where members have little access to care but the state doesn’t have to pay a premium to the CCOs.

Rep. Cedric Hayden, R-Cottage Grove, with the backing of Rep. Mitch Greenlick, D-Portland, drafted House Bill 2979 to corral the Oregon Health Authority and force them to put people immediately back into their CCO and requires new patients to be assigned in 30 days.

Reach Chris Gray at [email protected].