Oregon considering joining Nevada in giving their own exchange another shot?
2018 MIDTERM ELECTION
Time: D H M S
As of today, there are 12 states which operate their own full ACA exchanges, including their own board of directors, marketing budget, bylaws and tech platform for their enrollment website. 34 states have offloaded just about all of that to the federal exchange, HealthCare.Gov. And then there are five states which are in between: They have their own state-based exchange...but their tech platform is basically piggybacked onto the federal exchange: Arkansas, Kentucky, Nevada, New Mexico and Oregon.
Arkansas and New Mexico always planned on moving off of HC.gov onto their own full exchange platform but never got around to doing so. Kentucky's ("kynect") was working perfectly well from day one, and only made the move to the federal platform after three years because new GOP Governor Matt Bevin decided he didn't like it for whatever reason. New Mexico and Oregon, meanwhile, had such major technical problems at launch that they scrapped their sites after the first year and moved to the Mothership. (As an aside, Hawaii also scrapped their exchange site after the second or third year, but they shut down their entire state-based exchange and moved everything to HC.gov).
Two years ago, I noted that after two years at HC.gov, Oregon was considering giving their own exchange website another shot:
Oregon is considering proposals by four companies to provide a new software platform for the state’s health insurance marketplace.
The state uses the federal insurance exchange, and state officials began to explore other options after the federal government decided to begin charging insurance companies a fee to use the exchange in Oregon.
Oregon has used the federal platform since its own insurance portal, Cover Oregon, failed to launch in 2013. The state and technology company Oracle, which built the Cover Oregon system, are still engaged in a legal battle over who is to blame for the problems.
They got as far as putting out an RFP to several vendors, but as far as I know it never went beyond that at the time; they stuck with the federal exchange platform (HC.gov) for both the 2017 and 2018 Open Enrollment Periods, and that was the last I heard of it...until today.
Back in February, I reported that Nevada--the only state in the exact same situation as Oregon--has decided to actually go ahead and break off from HC.gov in 2019:
Nevada wants out of federal health exchange
Nevada's Silver State Health Insurance Exchange took the first step on Thursday to getting out of the federal healthcare.gov system and build its own exchange.
The Legislative Interim Finance Committee granted SSHIX $1 million from its own reserves to put together an RFP and find a private provider.
I think this is a fine idea for several reasons, but the exchange is looking at one reason in particular:
Heather Korbulic, executive director of the Nevada exchange, said they have to make a change because the federal exchange is raising its premium rates dramatically.
...She said when the federal charge rises to 3 percent in 2019, it will consume all but a tiny fraction of the 3.15 percent premium leaving the state almost nothing to run the front-end operation.
As I explained at the time, this refers to the fee charged by HealthCare.Gov to every state whose exchange it hosts to cover operational expenses as well as the marketing/outreach budget and so forth. Oregon and Nevada weren't charged anything for the first couple of years, but were charged a 1.5% of premium fee in 2017, 2.0% in 2018 and are scheduled to be bumped up to 3.0% this fall, which was the spark the Nevada exchange needed to make the move.
Well, it looks like they're not the only ones: Apparently Oregon is gonna dust off their plans from a couple of years ago and seriously consider dumping HC.gov themselves as well:
...with rising fees to use the federal site and limited flexibility, state health officials are now mulling whether it might be time to relaunch the state’s own healthcare insurance exchange.
“The question is whether there is some alternative that would actually be cheaper, or at least competitive in price, that might also give Oregon flexibility,” said Jesse O’Brien, policy director for the Oregon State Public Interest Research Group and a member of the exchange’s Marketplace Advisory Committee. “Having no control over the system, it’s already clear over the past few years, that it’s not the optimal situation.”
...Because fees are charged as a percentage of premiums sold through site, and premiums are rising year over year, the amounts paid by the insurance plans and ultimately by consumers are growing even faster.
As an aside, this goes right back to a question I also posed back in February: Since the fees are based on a percentage of unsubsidized premiums, and the fee has remained the same even as unsubsidized premiums have doubled...where the hell is all the extra money going, especially since most of the startup IT costs had long since been amortized and since the Trump Admin. slashed the budget for marketing/outreach by 90% and 40% respectively last fall???
Getting back on point...
Oregon exchange officials said health plans paid an estimated $16 million in fees for the 2018 open enrollment period, and expect to pay somewhere between $25 and $30 million for 2019.
Those price hikes have spurred discussion among staff and advisory committee members whether the state is still getting its money’s worth in using the federal exchange, or whether acquiring its own technology might be cheaper.
Just as Nevada has concluded, five years in, all the heavy lifting has been done and the "1.0" screw-ups have been worked out. It should cost a fraction as much for either state to set up an ACA exchange today than it did in 2013, with a much better reliability/usability record, since they should be able to simply copy one of the other state exchanges and tweak it for their own needs. That's exactly what Maryland did in 2014 when they basically leased Connecticut's exchange site.
Oregon exchange officials have also been frustrated by the lack of control the state faces when using the federal platform. Last year the Centers for Medicare & Medicaid Services, known as CMS, decided to shorten the open enrollment period for HealthCare.gov over the objections of many states. States that ran their own exchanges were able to extend their enrollment windows and increased the number of consumers who signed up for insurance. But Oregon was stuck with the shorter window.
Yup, local control can be a wonderful thing.
...Oregon and the four other states who use the federal technology to power their exchanges have started negotiating as a group with CMS, pushing for more flexibility and for more access to data on enrollees. The states were able to secure a list of who enrolled during the open enrollment period, but do not have real-time access to enrollment data.
Yup, anyone who reads this site regularly knows how frustrating that is for me in particular!
“There will always be limitations on that because HealthCare.gov is a monster machine, and it is difficult to parse out and select data just specific to a certain state or to create any type of flexibility in that giant architecture,” said Heather Korbulic, executive director of Nevada’s health insurance exchange. “We’ve been successful in getting some data, but it’s never real time, and the likelihood of having real-time data is very small.”
...CMS officials did not respond to a request for an explanation of the price hikes. Agency staff said the fees are similar to what states using the federal exchange pay for the same services.
States relying completely on the federal exchange are charged 3.5 percent, just a half percentage point more than states like Nevada and Oregon, that do much of the work of operating an exchange, but rely on the federal software.
My problem isn't with Oregon paying nearly as much as other states; that seems reasonable. My problem is with the fee itself being so high to begin with.
3.5% might have made sense back in 2013-2014, but as premiums have increased, the only way to justify keeping it at 3.5% is if the real costs of operating HC.gov itself have also continued to increase at a similar pace. Otherwise, they should lower the rate to 3.0% or 2.5% or whatever across the board.
Anyway, stay tuned to see what happens with Oregon...