Oregon Embarks on Public Health Plan Option

More questions than answers surround the creation of a statewide public option and health insurance exchange
The Lund Report
August 11, 2010 -- Those who fought so hard for a publicly-owned health insurance option during much of 2009, only to be dismissed by Congress, may see their dreams realized at least in Oregon by 2014.
The state has hired Bill Kramer, a reputable healthcare consultant, to develop a business plan to determine how a statewide public health plan could become economically sustainable.
While Congress ultimately eliminated the public option from its final legislation, the Oregon legislature gave state officials the green light to develop the concept in House Bill 2009 during last year’s legislative session. But that was largely before the public option became such a political lightning rod.
Similar efforts for a state-based public option are under way in the state of Washington. And a bill in Congress to create a national public health plan was introduced in July, but stands little chance of passing.
The future public health plan in Oregon would “not necessarily be a government-run delivery system such as the Veterans Administration,” Kramer said in statements laying out his initial thinking on Tuesday (Aug.11) before the Oregon Health Policy Board, which ultimately will make recommendations to lawmakers.
A likely framework is a publicly-owned organization such as Medicaid and Medicare, which outsources certain functions in varying degrees. SAIF Corp., Oregon’s public workers’ compensation fund, is another example. “There’s a range of relationships you might imagine,” said Kramer.
Advocates have claimed that the plan will likely keep administrative costs and executive compensation below commercial market rates. Tough decisions also face a public option such as how much to pay providers. Startup costs are another crucial element.
Kramer expects to report back to the board, which oversees the Oregon Health Authority, in September with public comment to follow.
Tuesday’s board meeting in Portland was attended by more than 60 state employees and industry representatives for close to four hours, though few people testified aside from a collection of consumer advocates.
Dr. Mike Huntington, representing Oregon Physicians for a National Health System, which advocates a single-payer system, said the public option should be dominant.
Liz Baxter, executive director of The Archimedes Movement – founded by John Kitzhaber – said the state should think of something else to call it other than a public option because of the stigma attached.
“The key to the public plan is building the business case,” said board member Eileen Brady, co-owner of New Seasons Market. “We have to show how it increases quality and decreases costs.”
“What really intrigues me about the public option is using it to drive delivery system reform,” said Dr. Chuck Hoffman, also a board member.
Despite more than 2,000 pages of federal legislation, much of the details about how to reduce costs and transform the delivery system have been left to individual states.
Board members also received a progress report on the first steps toward establishing a statewide health insurance exchange by 2014 as envisioned by Congress. Left in the state’s control, however, are issues related to out-of-network charges, setting rates and   determining provider panels.
The state has $1 million to develop the exchange where individuals and small groups with incomes up to 400 percent of poverty can purchase subsidized plans, said Barney Speight, director of health care purchasing for the Oregon Health Authority. Speight recommended the state form a public corporation to administer the exchange similar to SAIF and Oregon Health & Science University.
There are a myriad of questions before an exchange can be implemented. For example, how much freedom will insurers have in determining plan benefits, and will they be able to offer competing plans outside the exchange?
By fall, a draft proposal for the public option and the health insurance exchange should be readied for public comment.

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