Exchange Bill Pits Business Groups Against Consumers
A hang-up over selective contracting has the health insurance exchange bill hanging by a thread
May 26, 2011 -- Legislation to create a health insurance exchange in Oregon by 2014 is pitting business groups against consumer advocates when it comes to an important aspect of the bill that could make the end product stronger.
The state wants to create its own health insurance exchange – primarily a web site where individuals and small businesses can buy coverage – using part of $48 million from a federal grant for information technology. The alternative is to let the federal government impose a national exchange, based on provisions of the Affordable Care Act.
State-based exchanges throughout the country are supposed to pool risk, increase competition and eventually lower costs. But there’s disagreement at the legislature over how much power the public corporation created to run the exchange should wield.
The Oregon Business Association, Oregon Business Council and Associated Oregon Industries all told a House committee in writing on Wednesday they oppose an amendment to SB 99 that would eliminate a single sentence.
The sentence essentially prevents the exchange from selective contracting and having a competitive bidding environment for insurance plans to qualify, said Laura Etherton, lobbyist for the Oregon State Public Interest Research Group.
OSPIRG, along with more than a dozen other consumer-allied groups, including SEIU and AARP Oregon, opposed a version of the bill that passed the Senate more than a month ago, saying they could live with the proposed amendment.
“We want insurers to compete to get the best plans into the exchange,” Etherton said. “It’s removing that competitive bidding environment that we feel is such a missed opportunity to effectively address the problem consumers are dealing with.”
The business groups that opposed the amendment said they still favored SB 99 as currently drafted. The bill was the result of a bi-partisan workgroup on the Senate side that tried to strike a balance with insurance companies.
“As written, the bill creates a competitive, innovative market with plenty of choice,” said Betsy Earls, lobbyist for AOI. “This benefits individuals and employers alike. Adopting the amendments would allow the Exchange Board to include a proposal on selective contracting in their business plan. This is inappropriate for a number of reasons.”
Earls went on to say that selective contracting could limit choices to consumers.
Rep. Jim Thompson (R-Dallas) said he thought competition within the exchange could serve as an effective mechanism to reduce cost just as much as selective contracting by the board.
Rep. Mitch Greenlick (D-Portland) disagreed. “The health insurance industry is not used to competing on price. They basically shadow price to get to each other.”
Also making their voices heard on the issue has been the Oregon chapter of Americans for Prosperity, aligned with the Tea Party Movement. The group has sent hundreds of letters to lawmakers in recent weeks urging them to oppose completely SB 99 because it’s part of a federally imposed health reform plan.
“Federal courts have already determined that at least portions of the law are likely to be found unconstitutional,” a recent letter from the group states. “When the Supreme Court ultimately rules in this matter, Oregon will be left having to undo SB 99 and the legislature will have wasted its time.”
If the bill does not pass this session, lawmakers may still be able to pass something in the following legislative session next February to meet the 2014 deadline. If not, many of the groups pushing for a stronger exchange have said thy might be willing to accept a federal program over the cards they’ve currently been dealt.
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Health exchanges have implications for benefits, especially cost and utilization http://www.healthcaretownhall.com/?p=4018
I think it would be more correct to characterize the conflict over SB 99, and it's ability to control health care prices through selective contracting, as between very large business interest groups (most of whose members will be too big to qualify to join the exchange) and large insurance companies vs. those most empowered by the exchange: consumers and small businesses and their advocates. In addition to the organizations mentioned in the article, small business organizations, including the Main Street Alliance of Oregon, Small Business Majority, and the Oregon Small Business Council for Responsible Leadership have all strongly endorsed enabling the exchange to negotiate for the best price and service from providers. As to exchange board membership; in order to provide transparency and trust, a guiding principle has to be preventing a conflict of interest between the exchange members and those entities, like insurance companies and health care providers, with whom the exchange contracts. Health care advocates have urged that the exchange establish an advisory group made up of representatives of all the health care provider interests so that no expertise is left out. I can't imagine a scenario in which insurance companies, if denied a voting board position, would not make certain their particular interests were heard by the exchange board.
I agree with Rep Greenlick completely..have you noticed that every rate increase for the last several years -the rates have gone up without question? We need stiff regulation of these Insurance companies and and exchange that is very competitive pushing the costs downward without giving up care....Greed is the biggest problem we have right now and fear. We need to give not continue to take and throw poor ill people on the streets. This happening if you have not noticed.
I am a person who has been buying private policies for many years. I am at an age that my rate for a good insurance policy is unaffordable. I am to young for Medicare. That is what we have now.
The Insurance Division isn't doing much for people in my situation.
We are the customers. The insurance companies want OUR business. They should be catering to our needs. If they do not want to they can do their business elsewhere.
Let them compete with each other. Isn't that what our economy is about?
I wish this legislation would do more to control the underlying reasons for increasing healthcare costs. Adding additional administration (The Exchange) will do nothing to control the premium that is needed to pay the doctor and hospital bills we incur. To be effective, we must also address what will and will not be covered within the benefit structure and start making tough decisions about health services/procedures that do nothing to improve the quality of people's health. Until we are able to say "No" to high cost/low success services we will keep paying higher premiums and force small businesses in Oregon to abandon the employer paid health plan altogether. That would be a shame.
Is the $48m federal grant contingent in any way on passage of an exchange bill?
Rep. Greenlick obviously thinks the Insurance Division is inept since he thinks the insurance companies are able to manuver around them to get the rates they want for small groups and individuals. The division must not be capable of doing their job which includes a rates review process. I wonder why he thinks the Exchange as a public corporation will be able to do a better job in negotiation with insurance companies. I guess the board of directors will include someone who has purchased an individual policy I am sure thier experience will prove to be invaluable when negotiating benefits, rates, projected loss ratios and revenues, and how all these will relate to the mandated changes in the industry that are coming our way, It's a good thing we aren't required to have anyone with any actual industrry industry knowledge on the board but we will be required to have consurmer advocates.