Republicans in Congress Unable to Stop Funding for Health Exchange

Oregon officials are preparing a multi-million dollar grant to develop an electronic technology system for the health insurance exchange


November 16, 2010 -- With Republicans poised to take over Congress in January, it’s extremely unlikely they can stop the flow of federal dollars headed to states for implementation of healthcare reform.        
“Unless they were able to repeal the Affordable Care Act, funding wouldn’t go away,” said Nora Leibowitz, senior policy analyst with the Office for Oregon Health Policy and Research. “I feel confident the money won’t go away over the next few years.” 
Leibowitz is fine tuning a multi-million planning grant to develop an electronic technology system for the state’s health insurance exchange – which will harness the buying power of individuals and small businesses, providing them with a marketplace of affordable health coverage choices from competing insurance companies. The Department of Health and Human Services intends to award five such grants next year.  
“The feds are looking at the exchange to help fund some of the information infrastructure,” Dr. Bruce Goldberg, director of the Oregon Health Authority, told the Oregon Health Policy Board. “Our work on insurance exchanges predated federal health reform, and we should be extremely competitive. Oregon is increasingly viewed nationally as one of a handful of states moving forward quickly with planning for an exchange.”
Liebowitz is still uncertain how much Oregon will request because the feds haven’t mentioned a specific dollar figure. “That’s the tricky thing,” she said. “They’re asking us to tell them how much we need, and I’m working with folks from the Oregon Health Authority and Office of Information Systems.” The grant proposal is due December 22,
Oregon may team up with Washington, giving it a better chance at success, and also is willing to share whatever technology system it develops with other states, Leibowitz said.
“The exchange will need to have significant information technology effort to make it work,” she added.
In September, Oregon received a $1 million federal planning grant to begin doing research and planning for the exchange. Alaska and Minnesota were the only states not receiving such funding because they didn’t apply.
The health insurance exchange will allow families and small businesses to compare the health benefits they purchase and access bargaining power comparable to that of established larger groups and corporations for the first time – giving them greater control and more choice.
Tax credits will be available to those earning up to 400 percent of the federal poverty level. After 2014 – 65 percent of the uninsured and 90 percent of all Oregonians are expected to have insurance coverage.
Dr. Samuel Metz, urged the Health Policy Board to keep in mind that people participating in the exchange may not have had any experience in purchasing insurance, and could end up completely flummoxed.
“Coverage should be as attractive as possible to as many people to spread the risk fairly,” said Metz, interim chair of the Portland Chapter of Physicians for National Health Care, “and made available to as many people and businesses in the beginning to make the program viable.”
Once the exchange gets under way, Barney Speight expects health insurance premiums to increase due to guaranteed issue – when insurers have to accept everyone regardless of their physical or mental condition. 
“We don’t know the rules of the road on the exchange from the feds and don’t know what the rules from the insurers will be,” Speight, director of healthcare purchasing for the Oregon Health Authority, told the Health Policy Board. “But you can anticipate a huge growth in the market. There’s an assumption by some insurers in Oregon that this will be a growth opportunity for them to compete effectively and gain new lives.”
Current estimates assume Oregon will receive $42 million in start-up costs from the feds, but that number could grow to $63 million, he said. “That number is based on our best operating scenario right now, but we don’t really know what all the twists and turns of the federal requirements that will have a cost impact – some up, some down.”
Enrollment in the exchange is expected to rise from 142,500 in 2014 to 232,500 by 2016, with 150,000 previously uninsured individuals gaining coverage by 2019. Employee coverage is projected to grow from 65,000 employees in 2014 to 95,000 in 2016
The exchange should be self-supporting by January 2015, not relying on state general fund or federal support for ongoing operations, and a high level estimates assumes it will be supported by a 3.3 percent fee. However that fee could lower to 2.8 percent by the 2016, according to estimates by Bill Kramer, a consultant to the Oregon Health Authority who spoke before the Health Policy Board yesterday. 
To learn more about the work of the Oregon Health Policy Board, click here


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According to the Oregon Health Authority, here are the kinds of risk adjustments systems that will be required in state health insurance exchanges. TheThe federal health reform law identifies three risk spreading or risk mitigation programs that will begin in 2014: risk adjustment; reinsurance; and a risk corridor. The first two will be administered at the state level, while the risk corridor will be a federal effort. The state risk adjustment program will apply to individual, small group and some large group products. The program will redistribute money from plans that incur lower than average risk to those with higher than average risk. The federal Health and Human Services Secretary will establish criteria and methods that will structure the state programs. The reinsurance program is for individual market plans. Although it will be administered at the state level will be based on federal standards. The risk corridor will apply to individual and small group products offered through the Exchange and will be based on the risk corridors used in Medicare Part D. Reinsurance and the risk corridor will be time limited, lasting only for three years starting in 2014. Risk adjustment will be permanent. In addition, the federal government is working on a short-term reinsurance program for retirees, which ends in 2014. The state will need statutory authority to establish these mechanisms, but no decisions are needed about whether to implement these efforts.