Community Health and Consumer Advocates Oppose Exchange Bill
A strongly worded letter to legislators carries a simple message: “We cannot support Senate Bill 99-3”
March 29, 2011--The latest amendments to Oregon’s health exchange legislation have incensed many of the bill’s former supporters by altering key provisions around consumer protection, conflicts of interest among exchange board members and the exchange’s negotiating power.
“We cannot support [Senate Bill] 99-3,” stated a letter to legislators from a large coalition of human services and consumer advocacy organization leaders, including David Rosenfeld, OSPIRG’s executive director, National Alliance on Mental Illness - Oregon executive director Chris Bouneff, and Jack Dempsey, the director of health policy and government relations for the Oregon Nurses Association.
Senate Bill 99, and its most recent, “dash-three” amendments, are Oregon’s attempt to create a health insurance exchange mandated by the federal Affordable Care Act. As originally envisioned, the exchange would operate as an online insurance marketplace, offering consumers and small businesses an opportunity to shop for health plans, take advantage of tax credits and get lower insurance rates by participating in a larger pool.
The letter calls out new language in the bill for preventing the exchange from negotiating lower costs from insurers by allowing any federally approved and state-qualified insurer to offer plans within the exchange.
The new language, the letter’s authors contend, “Appears to prevent Oregon’s exchange from having any type of standards for plans in the exchange, and … the exchange seems to be forced to offer the same number of plans from each insurer, as opposed to offering a variety of plans that best serve the interests of enrollees.”
One issue discussed in the letter has been a bone of contention since the bill was introduced: allowing two of the board’s seven voting members to be representatives of the insurance industry.
“Two of the seats on the board could be occupied by individuals representing interests that the board may be contracting directly with, or interests with a financial stake in the details of those contract negotiations,” said the letter.
However, as Sen. Alan Bates (D-Medford) pointed out at Monday’s work session on the bill, “This isn’t prescriptive; it doesn’t say [those two members] have to be from the insurance industry.”
Still, Sens. Chip Shields (D-Portland) and Frank Morse (R-Albany) expressed concern that the bill in its current form could allow the governor to appoint board members who have significant conflicts of interest between their professional and board roles.
“This is not my preferred [bill] language,” said Morse.
Both the letter writers and legislators had concerns about the bill’s failure to protect against what’s known as adverse selection, where sicker people wind up dominating the insurance pool, healthier people remain outside it, and the increased cost of covering the less healthy population drives up premiums and drives the remaining healthy people out of the pool to seek less expensive coverage.
At Monday’s hearing, Shields made the case for strong regulation inside and outside the exchange by the state’s Department of Consumer and Business Services (DCBS), “So people in the individual market have someone to advocate for them.”
Likewise, the letter advocates for strong regulation by DCBS, in conjunction with the Oregon Health Authority and the public corporation running the exchange.
Another change to the bill involves limiting the fees the exchange collects from insurers to only plans inside the exchange. A prior version directed the exchange to collect fees from all plans inside and outside the exchange under the assumption that the exchange would lower its own rates and those of plans in the outside market, thus benefiting both markets.
“Failing to assess the fee across plans and carriers both inside and outside the exchange will also have the unintended consequence of creating an incentive for insurers to drive enrollment to plans outside the exchange to avoid paying the fee,” the letter says.
The bill’s next round of amendments will be drafted and presented Thursday to the Senate Subcommittee on Health Care Reform. Concurrently, Rep. Mitch Greenlick (D-Portland) will begin work on the House’s version of an exchange bill, which he introduced at Monday’s House Health Care Committee meeting.
“We decided it would be useful to hear [elements of Senate Bill 99] in the House,” said Greenlick. He added that the Senate bill’s second round of amendments would be the starting point for House Bill 3137.
Greenlick didn’t clarify this statement, but given his fierce opposition to the Senate bill’s inclusion of independent insurance brokers in the exchange, it’s likely that his bill will make sure brokers are out of the picture.
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Thanks for sharing. Always good to find a real exerpt.
1. Given the severe conflict of interest for voting members from the insurance industry on the exchange board, and the same conflict for any insurance brokers or agents, that should be a "no-go" for a board whose mission is serving consumers. As a physician (he and I), I'm surprised at Sen. Bates' expressed willingness to accept the potential for insurers to be appointed.
2. Likewise, rules that require standardized apples-to-apples plan designs, chosen by the board for appropriateness to the mission, and not by insurer preferences, are critical to that mission.
3. Failure to safeguard against adverse selection in the exchange pools will result in a different version of today's problem, with unaffordable premiums; even though those safeguards may be politically unpopular to some, they must be included or the mission of universal access to affordable insurance will fail.
4. Finally, the issue of fees applying across all products, in or out of the exchange, is important to its success. There are many subtle ways people can be attracted "outside" to the advantage of insurers or agents.
This should be a consumer law, not an industry-driven law. The industry has been and will remain quite capable of representing itself with words and money!
Don Thieman, M.D.
bjcefola -
You know what? I think this is a case of combining multiple drafts of a story together and losing some of the sentences that made it all make sense. You're right in that adverse selection is more pertinent to plan design than it is to rate review, but I think in a prior draft I had another paragraph in there specifically discussing rate review, making the transition from adverse selection to Shields's rate regulation crusade easy to follow.
Fortunately, we have the power of the Internet at our disposal, so I'll go in and edit this section so it's less confusing, and reflects the fact that (most of the time, at least) I actually do know what I'm talking about.
Thanks for keeping me on my toes!
-Rebecca
Rebecca, could you clarify the point about adverse selection? That seems like a matter of limiting plan design more then something one could deal with in rate review.
Three healthcare reform papers: Key considerations for state health exchanges--structure, terms of participation, plan design. http://www.healthcaretownhall.com/?p=3767