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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