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Relatively low rate hikes likely under Obamacare plan administered in the state

Despite the U.S. Senate failed attempts to repeal Obamacare, Oregon officials are saying that the latest round of relatively low health insurance rate hikes here show that the law doesn't need to be abolished.

"There's a lot here that leaves us optimistic that the market is in fact stabilizing," Patrick Allen, director of the state Department of Consumer and Business Services, said.

For months, President Donald Trump and other critics of the 2010 health care law, the Patient Protection and Affordable Care Act, have cited escalating private health insurance rates for those who buy their own policies as evidence the market is in a "death spiral" from which it can't rebound.

Oregon's tentative insurance rate increases, issued June 30, averaged 8.4 percent, well below the numbers tossed around in other states.

The average proposed hike in Oregon is significantly above inflation, but that still counts as good news compared to the massive rate hikes of years past. Last year, for instance, the state approved average rate hikes of 10 to 32 percent for Oregon carriers.

But the shred of hope offered by the new, tentative rates could be out the window under a bill in the U.S. Senate that aims to repeal and replace the Obamacare law, Oregon officials said.

Known as the Better Care Reconciliation Act, the Senate bill would cut the subsidies for lower-income people that under Obamacare have offset the higher rates. Those subsidies come in the form of tax credits that reduce monthly health insurance premiums for those who buy policies for themselves or their families.

Those effects come on top of one that would affect many more people. The Senate bill also would cut the increased Medicaid funding that allowed the Oregon Health Plan for low-income people to greatly expand. The program now covers nearly a million people, or one in four Oregonians.

But if the Senate bill passes, the state would have to lower the income cutoff for eligibility, to absorb federal cutbacks of as much as $1.8 billion a year. That would lower the overall enrollment figure by around a third, according to a recent state report.

Complicated 2010 law

Passage of the Obamacare law made a variety of complicated changes that affected the private health insurance market and the government-funded Medicaid program.

On the Medicaid side, the federal government allowed states to boost the income limits for recipients to 135 percent of the federal poverty level, while increasing its payments to that group.

Especially in Oregon, where officials adopted a streamlined application process, the change had a huge impact, allowing Oregon Health Plan enrollment to climb by about 300,000.

On the private health insurance side, the 2010 law required insurers to issue policies to people without regard to pre-existing conditions and to set in place an "individual mandate" requiring most people have insurance. The individual market, where people buy their own policies, was supposed to be where the uninsured went to get coverage, using online exchanges or marketplace websites such as what in this state was known as Cover Oregon.

But insurers have complained that the federal penalty for not having insurance, as well as enforcement efforts, have not been stiff enough to motivate enough healthy people to buy insurance. As a result, the pool of people covered has a relatively high proportion of sick people whose health care expenses have driven up costs.

The Senate bill eliminates the controversial individual mandate but retains the popular aspect of Obamacare that insurers cannot discriminate against the sick. However, the prices to get insurance for those with some pre-existing conditions may be prohibitively high, rendering that guarantee meaningless for many people.

Observers say the Senate bill also is going to make it easier for the healthy to drop their insurance, leaving an unhealthy pool of the insured behind.

"I think there's a very real chance of a death spiral if one or another of the bills being debated in Congress passes," said Jesse O'Brien, a consumer advocate with the group OSPIRG, which tracks health insurance rates closely.

He said Oregon's approach toward fixing rates, including a newly approved program, should be a model for other states. The Legislature recently reinstituted part of an expiring state program that levies a 1.5 percent tax on health insurers and uses the revenue to cushion the blow of costly health care claims filed with insurers.

"Oregon is demonstrating that if you have political leaders that actually want to take action to make the system work, you can make it work," O'Brien said.

He conceded that the new equilibrium is "not a great one. I think people are still paying way too much, but I don't think that it's spiraling out of control."

Fate unclear

The fate of the Senate bill remains unclear. Trump has maintained a confident public stance on the chances of the bill's approval, but his party remains divided on the bill.

Many expect further changes as Senate Majority Leader Mitch McConnell seeks to fulfill Republicans' promise to repeal Obamacare.

"Don't underestimate Mitch McConnell is still a good bet," said Allen, the state agency director,

Some Oregon insurance executives have concerns about the bill, but are waiting to see what actually passes before focusing too much on details.

"I'm only interested in what passes," said Ken Provencher, CEO of PacificSource. "I hope we don't go through a complete repeal and I'm not sure the politics line up to make that happen."

Provencher agreed with Allen that Oregon appears to be emerging from death-spiral territory.

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