Regence Wants Slow Approach on Reform
Since 2006, Massachusetts has seen a dramatic reduction in premiums for individuals and small businesses after creating an insurance exchange.
“Go slow and build on what’s working,” Mike Becker, head of regulatory and legislative affairs for Regence told the Oregon Health Policy Board on Feb. 9. “Seemingly minor changes can significantly impact costs and risk in unexpected ways.” He was representing Oregon’s domestic insurers that provide coverage to two million Oregonians.
But Eileen Brady wasn’t convinced. “I just can’t buy your argument because I pay so much as an employer,” said the co-owner of New Seasons Market who sits on the Policy Board. “I believe an exchange could put some pressure on cost.”
An insurance exchange – coupled with major health reform requiring everyone to purchase insurance -- has had a huge impact in Massachusetts. Since its reform law was passed in 2006, individual rates have gone down by 25-40 percent, according to Nancy Turnbull, who sits on the board of the Massachusetts Health Insurance Connector, and is a senior lecturer in health policy and associate dean for educational programs at Harvard University’s School of Public Health.
The exchange gives consumers an opportunity to navigate the system and make more informed choices about competing health plans, but it definitely won’t lead to “nirvana,” Turnbull told the Policy Board. It does, however, help “shine a bright light on premium increases,” she said.
If Oregon decides to follow Massachusetts’ lead, it needs approval from the legislature. And it’s extremely likely there’ll be strong opposition, particularly from the insurance brokerage community, which derives its income by selling policies to consumers and businesses.
Steve Doty made that perfectly clear. Representing the Oregon Association of Health Underwriters, he cautioned policymakers against heading in that direction unless, he insisted, an exchange would actually reduce overall costs.
“It might be nice to have a savvy web site,” said Doty, who runs Northwest Employee Benefits. “But the real issue we’re having in this debate is how to reduce the cost of healthcare, and I can’t see how this approach can save any money.”
Nita Warner questioned its value as well. As president of a small business in Hillsboro,
Ornelas Enterprises, Inc., she’s concerned about having to pay an assessment to support companies that don’t offer health coverage and also worries that people will choose health plans on the exchange that have physicians with open practices.
“I don’t see any benefits to small business,” said Warner who also sits on the Policy Board. She also urged officials to hunt down medical supply companies that charge a $2,000 profit for devices that sell for a fraction of that price.
It’s unknown whether the Policy Board will recommend the implementation of an insurance exchange when lawmakers convene in 2011. They did, however, agree that by making changes to the delivery system, it will have an impact on population health and cost.
Meanwhile, here are some of the highlights of the Massachusetts Health Reform Law
- Insurance is subsidized for low and moderate income (for adults up to 300 percent of the Federal Poverty Level.
- The individual and small group market (1-50) has been merged and everyone can purchase insurance, including young adults, on the exchange known as the Connector (www.mahealthconnector.org).
- Dependents can remain on their parents health plan until age 26.
- Individuals over age 18 are required to have health insurance – “if it’s affordable” or pay a state income tax penalty.
- Employers must provide coverage or make a “fair share” contribution.
- The monthly individual premium ranges from zero for those earning less than $16,260 to a high of $342 a month for people whose income is between $44,201 and $54,600. Above that level, there is no subsidy.
Since the reform went into effect, none of the carriers have left the market, Turnbull said, and now only 2.7 percent of the population is uninsured, compared to 10.4 percent in 2006, before the reform was implemented.
Public support for the individual mandate and health reform initiatives remains high, which Turnbull called “unprecedented.” In 2006, after the reform passed, 61 percent favored the reform. Three years later, in 2009, polling showed that 59 percent remained supportive.
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Relative to the "success" of the Massachusetts experiment, if you go into ehealthinsurance.com and price the options of individual insurance in Oregon as contrasted to Massachusetts, the insurance offerings in Mass are far fewer in number and more expensive. Price quotes in Massachusetts for a male, age 64, range from $476 to $656 per month; In Oregon, the range is $129 to $499. Significant differences in annual deductibles, but if the object were to buy insurance to protect against large unanticipated expenditures, it is no contest. Seems like Mass has the margin to reduce individual premiums another 50%. Does not sound like a resounding success to me. Do your own critical analysis
Exchanges that market health care as a commodity Expedia-like don't work.
1. AG finds clout of hospitals drives cost State’s insurers pay twice as much to some provider; January 29, 2010; Boston.com http://tinyurl.com/yhraza6
2. Massachusetts’ Plan: A Failed Model for Health Care Reform http://tinyurl.com/l98wsn
3. Lessons from Massachusetts Health Care Reform http://tinyurl.com/yzbszev
Mr. Doty is correct. The overhead costs to create more middlemen will not decrease costs. You can bet that Kaiser VP for marketing, sales and business development Mark Charpentier won't find the exchanges sufficient to boast their ability to leverage PhRMA for reasonable cost containment on drugs. Marketing will still be a huge overhead for all insurance plans.
From this link: http://tinyurl.com/ybyv94x
(t)he merger of the small business and individual insurance markets under that legislation actually drove up premiums for small companies. And the statute also requires employers with 11 or more workers to offer coverage or pay a fine of $295 per employee per year. While that mandate probably plays a minor role in small employers’ decisions on whether to drop coverage, the rate increases they experience each year might push some firms over the edge.
With the lack of price control (ref. 1), the MA governor is proposing caps on premium increases and charges by providers, eventually moving toward outcome-oriented global payments/medical home and away from fee-for-service.
http://tinyurl.com/create.php
As for the latter, we must reckon with the fact that Kaiser and many PDX metro doctors are paid a salary. But since these plans compete for doctors who are paid fee-for-service through the "free market" aligned with traditional insurers, pay scales are similar. Thus the specialists at Kaiser will pay the two higher marginal taxes, while PCPs are probably spared any tax increases with M 66 & 67.
Whether that explains why Kaiser is unaffordable for many (marketing can't eliminate that problem) and also has stooped to catastrophic plans with high deductibles and HSAs in addition to rejecting new patients for pre-existing conditions such as menometrorrhagia (heavy menstrual bleeding) and migraines in a pre-menopausal woman (True story.) is uncertain.
But exchanges won't solve anything.
According to TR Reid, universal coverage is possible only when a nation makes the moral decision that health care is a right. http://tinyurl.com/yf9t6r2
In his research of OECD countries Alex Preker, a leading health economist at the World Bank, concluded that universal health care, in fact, leads to cost containment. http://tinyurl.com/yedazhg
We need to support HJR 100--Greenlick's health care is a universal right.
The Health Policy Board has a legislative mandate to propose a business plan for an Insurance Exchange as part of HB 2009. the big question will be what will it look like.
The perspective of the industry is predictable. And the cost-savings argument is a red herring since everyone agrees that the cost savings of an exchange would be minimal.
Hear, hear to Eileen Brady's "I just can't buy it" response to Regence's "go slow" advocacy. This is also the only company that financially supported opposition to the two recent ballot measures, among health insurers in Oregon. Neither of those positions indicates putting a priority on the human value of getting affordable and accessible health care to those who need it, whether publicly or privately insured---rather both support lower taxes for the wealthy and a failure to give urgency to unmet needs festering for decades. Urgency is needed, and there will be broken eggs on the way to the omelet. Controlled and reasoned breakage is necessary if we are to reform health care and its financing. An exchange will not be "nirvana," as noted. But, done well like the federal employees' exchange, it WILL bring the ability for consumers to compare offerings and their prices much better than the current market, including the simplified spreadsheets used by agents that leave too much unanswered, and too little in the way of full disclosure comparison of benefits and prices. This is but one important step, among many, needed along the path to a better system.