HHS Officials Arrive in Portland Next Week to Discuss Health Insurance Exchange

August 18, 2011 -- Oregon’s health insurance exchange is off to a quick pace with the announcement that national policymakers are coming to Portland next week for a listening session on the exchange involving advocates, health plan executives, business leaders and state officials.

At this multi-state event hosted by the U.S. Department of Health and Human Services, the participants will look at the framework behind the insurance exchanges which will create competitive marketplaces so that individuals and small employers can compare private health insurance options on the basis of price, quality and other factors.

Discussion will also revolve around the rules for health insurance exchanges – re-insurance, risk corridors and risk adjustment “to assure stability in these newly established markets,” according to a letter sent by Susan Johnson, regional director of HHS Region X who’s organizing the meeting with Herb Schulz, who holds a similar role with Region IX.

Steve Larsen, director of the Center for Consumer Information and Insurance Oversight will also attend this meeting along with Joel Ario, director of the Office of Insurance Exchanges; Cindy Mann, director of the Center for Medicaid and State Operations; and  Chiquita Brooks-LaSure, director of Coverage Policy with the Office of the Secretary

Kitzhaber Expects to Announce Exchange Board

Within the next few days, Governor Kitzhaber plans to announce the members who’ll serve on the exchange board. They’ll require confirmation by the Senate which meets September 23.  

Once this occurs, Howard “Rocky” King, interim director says, “we can really begin in earnest some of the detailed work outlined in the bill (Senate Bill 99) relative to the business plan and significant policy issues that will come up during the February session.”  

When the board begins meeting in October, it will also create a small business/consumer advisory committee and seek nominations from the public.

Next February, legislators must approve the business plan for the exchange. “We’ll begin putting the pieces together as we plan and build the exchange but can only go so far without legislative approval,” King said. That work involves identifying the resources needed, the policy decisions the board must make to run the exchange and laying out the business infrastructure for the information technology component of the exchange.”

Oregon Successful in Receiving $8.9 Million Implementation Grant

Now that Oregon received an $8.9 million federal grant for the next year, it can begin designing and building the exchange – pulling all the policy and decision points together, including the technical and administrative infrastructure, King said.

One of the most important challenges facing the board is finding ways to support the delivery changes outlined in House Bill 3650 – creation of the coordinated care organizations and the global budget – “so the exchange can provide healthcare with good quality, value and at a sustainable cost,” King said.

Ultimately the board will develop the standards for insurance companies interested in participating in the exchange and also work closely with the Insurance Division on the rate-setting process.    

“I realize that consumers would like to see the lowest rates possible but rates are a function of the risk pools – the underlying medical risk and cost of those risk pools – where negotiations can take place is to ensure reasonable administrative costs as well as that costs reflect the benefits being offered under the plans.”

Under federal law, all of the insurance premiums must be the same – whether a health plan is purchased inside or outside the exchange. However, people earning up to 400 percent of the federal poverty level are only eligible for tax credits through the exchange.  

“My hope is to have an attractive enough portal – a shopping mall – that consumers want to utilize the exchange in comparing benefit plans among carriers and use that mechanism to purchase insurance.”

Starting in January 2014, the exchange will be available to individuals and small businesses – between 350,000-400,000 Oregonians are expected to enroll. Another 600,000 people on the Oregon Health Plan, CHIP and Healthy Kids will access health coverage through the exchange. At that time, insurers cannot deny coverage for pre-existing conditions or require a waiting period for enrollment.

“This will be a significant challenge; we cannot fail,” King said. “Too many people will depend on the exchange to get their health insurance, receive subsidies and determine if they’re eligible for Medicaid.” 

Marketing Strategies Could Include Insurance Agents  

King anticipates the board will look at a number of marketing and outreach strategies such as involving insurance agents and navigators. “Unless federal law changes, everyone must purchase health insurance and we need to got those people connected; that’ll be a significant challenge. I want to support any mechanism that we can bring in that will facilitate or assist people or businesses in purchasing insurance.”

Once the exchange is up and running, it’s imperative to get a handle on healthcare costs, King said. “We can have a very successful exchange in terms of enrollment but if, ultimately we see double digit increases in premium rates, it’s not the exchange that’s not sustainable; it’s healthcare – period. We cannot afford 5-10-15 percent increases year after year whether in Medicaid or the commercial market. It’s unsustainable. You can see what this is doing to Oregon’s budget today – the governor has stated a number of times that for all these dollars we’re putting in healthcare they could go into education and develop the state’s infrastructure.”

Down the road, the board may decide to look at a health engagement model for health insurers – a project being undertaken by PEBB – to lower costs by encouraging people to take responsibility for their health conditions or pay higher deductibles and co-payments.   

Eventually, the Governor would like to see large employers – including the Public Employees Benefit Board (state employees) and the Oregon Educators Benefit Board (school teachers) participate in the exchange but that won’t occur until at least 2017, King said.  

“But this isn’t that simple because we need to look at how the benefits are determined, for the 200 local school districts that have some a take in OEBB benefit programs, and the collective bargaining process for the state’s employees,” King said.

Last year Oregon received a $49 million federal grant to develop the information technology system infrastructure that will handle eligibility determination, premium collection and payment – all the business rules and processes.  

“Whatever we develop has to be shared with other states that they can customize for their own use. This is 100 percent federally funded – we’re designing a system for Oregon but also doing the federal government a favor by designing a system that’s portable to other states with modifications.”

King, who was appointed interim director by the governor, can only hold that position for 120 days – through the end of October. Then, the board chooses the permanent director. “Personally, at a minimum I’d like to carry this through the February session,” King said. “The board needs to make the decision on what kind of leadership they want going forward. If I can show them that I can do the job and have a good relationship with the board, then I’d be interested in the permanent position.”

Rocky King Joined by 17 Staffers and Consultants

Thus far, King has hired 17 staffers including:

• Jon Jurevic as chief financial officer who retired from ODS Health Plans where he had a similar role;
• Nora Leibowitz, director of the exchange implementation team;
• Damien Brayko and Kim Wirtz are part of the team that will design the framework for the individual and small employer exchange;  
• Aaron Karjala, chief information officer;
• Amy Fauver, director of policy programs and external affairs;
• Rachel Oh, who’s responsible for stakeholder groups, and
• Tris Delarosa, director of human resources and administration.

Two consultants are also on board -- Kevin McCartin will assist with actuarial services and Diana Bianco will work with the exchange board on governance and its decision–making process.

FOR MORE INFORMATION

To learn more about the health insurance exchanges, click here.