Oregon’s health insurance exchange still expects to remain sustainable, even as it projects a $3.5 million deficit in 2018 and a $3.3 million deficit in 2019, according to administrator Berri Leslie.
“This is a purposeful downward trend,” Leslie explained.
She told The Lund Report that the drawdown was necessary because the exchange is restricted by statute from keeping too high of a reserve on hand, and if it exceeds that limit, it would have to return money to health insurers, who fund the exchange’s operations through assessments placed on plans purchased through healthcare.gov.
The exchange currently has a reserve of $8.4 million, which is expected to jump to $12.4 million next year before tapering down to $5.6 million by the end of 2019. If the exchange continued to draw down money at that rate, it would be $800,000 in the hole by 2021, but Leslie said the exchange had ample flexibility to trim expenses or raise the assessment to avoid that situation.
The marketplace will lose one of its biggest sources of funding -- transfers from the Oregon Health Authority to cover technology contracts -- but that money is dedicated to those contracts, such as with Oracle, which are being phased out. That work will be reduced as the money dries up.
The anticipated money from the Health Authority will go from $8.2 million this year to $6.4 million next year to just $930,000 in 2018.
Those technology contracts currently account for 57 percent of the exchange’s expenses, but even as those costs go away, the marketplace’s budgeted expenses are reduced by only 6 percent next year before flat-lining at $13.5 million in later years.
Financial officer Carolina Marquette explained that the budgeting quirk was created to give the marketplace flexibility while abiding by the rules of the Legislature. The exchange has been approved for $13.5 million in expenses, and would have to ask permission to spend more if something came up. But it is not required to spend that money, and in reality, much of it will not be spent.
“I would expect that those may go down,” Marquette said. “That far out in the future, Berri has a lot of flexibility to [change] these numbers.”
The marketplace plans to reset assessment rates each January and February to take effect the following year. In January 2017, rates will go down from the current $9.66 per member per month, a rate set by Cover Oregon, to $6 per member per month, which reflects both the reduced expenses for the limited state marketplace and the current surplus.
The federal government will also phase in a new 1.5 to 3 percent assessment for use of the healthcare.gov technology, which would have left insurers paying a combined assessment as high as $18 a month if the state had not reduced its fee.
The enrollment in the individual health exchange jumped by a third from 2015 to 2016, just as the off-exchange market reduced by about that amount. The ease of the working website and the possibility of subsidies may have led more people to gravitate to the exchange.
Open enrollment begins Nov. 1, and Leslie said this year’s marketing will micro-target adults under 35 and Hispanics, the two groups most underrepresented in the current exchange customer base. “The focus on the millennial population will help the risk pool,” Leslie said.
As individual health insurance rates leaped an average of 23 percent, more people will be eligible for tax credits, as the unsubsidized premium prices go beyond what the federal government deems affordable for more Oregonians.
Chris can be reached at [email protected].
