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Oregon health insurance exchange / marketplace

24% weighted average rate increase in Oregon individual market, but just 2.5% for small group plans

24% weighted average rate increase

In 2014, individual plan carriers in Oregon took in $703 million in premiums, and spent $830 million.  They had to use reserves to make up the difference, and the state wanted to make sure that their premiums in 2016 are adequate to cover costs.

Earlier this year, when proposed rates were filed in Oregon, carriers were requesting a weighted average rate increase of about 23 percent.  But Oregon’s Insurance Commissioner determined that some of the rates filed – from HealthNet, Kaiser, Health CO-OP, and Providence – were too low, and wouldn’t be adequate to meet projected claims costs.  To mitigate the problem, the state needed to require higher rates than some of the carriers had proposed.

On July 1, Oregon became the first state to release final rates for 2016, and Oregon regulators did indeed increase rates beyond what several carriers had requested.  But they also ended up reducing the proposed rate hikes for two carriers – PacificSource and LifeWise.

Ultimately, the weighted average rate increase in Oregon’s individual market will be 24.24 percent for 2016, although the small group market should only see a weighted average rate increase of about 2.5 percent.  The rate increase is certainly steep, but subsidies will absorb the brunt of the rate hike for eligible enrollees, as long as they shop around during open enrollment to make sure they’re still getting the plan that represents the best value.  Even for people not receiving subsidies, the importance of shopping around cannot be overstated.  Rate increases in the individual market will range from 8.3 percent to 37.8 percent, so it will clearly be beneficial to shop around.

Although rates will be considerably higher in Oregon in 2016, consumer advocates caution that the pent-up demand for health care that existed in 2014 is unlikely to continue, since it was driven by a population that had been previously uninsured.  If that’s the case, rate increases may return to more sustainable levels for 2017.

Transitional (grandmothered) plans that were purchased after the ACA was singed into law but before the end of 2013 were allowed to remain in force (at carrier discretion) in Oregon until the end of 2015.  That means anyone in Oregon who still has a non-ACA-compliant, non-grandfathered plan, will need to select new coverage during the upcoming open enrollment, which starts November 1.

Exchange dissolution complete

On Friday, March 6, Oregon Governor Kate Brown signed Senate Bill 1 into law.  The legislation dissolves Cover Oregon and its board of directors, and transfers remaining responsibilities to the Oregon Department of Consumer and Business Services (the agency that oversees the Oregon Insurance Division).

The act was effective as of its passage, and DCBS Director Pat Allen officially took charge of the exchange, replacing Executive Director Aaron Patnode.  But the full transfer of Cover Oregon to DCBS wasn’t complete until June 30th.  By the end of April, 52 exchange employees had been let go, although more than 40 others remained on the payroll through June.  Although Allen had considered keeping Patnode on board for the transition, he ultimately decided in March that the new operation would be “best served with a simpler decision making structure.”

It’s likely that the term “Cover Oregon” will also cease to be used in the near future.  But Cover Oregon has been a complicated saga from day one, and even the move to eliminate it is fraught with controversy…

Cover Oregon and Governor Kitzhaber’s resignation

On February 13, Governor Kitzhaber announced his resignation from the Governor’s office just one month after starting his fourth term.  He was replaced by Secretary of State Kate Brown.  Although the scandals that led to Kitzhaber’s resignation were not related to Cover Oregon, questions are being raised about whether there were any conflicts of interest between Kitzhaber’s reelection campaign and the decision to shut down Cover Oregon and switch to Healthcare.gov.

Oracle (the vendor that built Cover Oregon) contends that there was, and now a congressional committee is demanding documentation to conduct an investigation.  By late February, Oracle had filed a lawsuit against several member’s of Kitzhaber’s staff and campaign team (including campaign consultant Patricia McCaig), alleging that the decision to shut down Cover Oregon was made for political reasons, and that the website had been functional by February 2014, two months prior to the decision to switch to Healthcare.gov.  The defendants in the case have asked that it be dismissed.

In addition, there are concerns that perhaps the lawsuit against Oracle was an effort to deflect blame away from the state and Kitzhaber leading up to the Governor’s re-election campaign in 2014.  In April, emails were released that indicated Governor Kitzhaber was advised to settle with Oracle rather than pursuing a legal battle, although he ultimately opted for the lawsuit.

2015 Oregon enrollment

As of February 22 (the end of the Healthcare.gov extension for people who had begun their enrollments by February 15), a total of 113,219 Oregon residents had enrolled in private plans through the exchange.

In addition, another 102,232 people have enrolled in ACA-compliant private plans outside the exchange in Oregon.  Off-exchange plans have to follow all of the same rules as on-exchange plans, but premium subsidies are not available outside the exchange.

So including both on and off-exchange plans, more than 215 thousand Oregon residents had enrolled in ACA-compliant individual private plans as of February 22.  That total had grown to 220,500 by April 21, although the most recent total didn’t break out on-exchange versus off-exchange enrollments.

As of April 21, Moda Health had the largest market share of ACA-compliant individual plans, with 101,370 members, including on and off exchange.  The second-leading carrier was LifeWise, with 37,000 members.  LifeWise had the lowest rates for 2015, and saw significant growth in membership during the 2015 open enrollment period.

There have been some discrepancies between the enrollment numbers reported by Cover Oregon and the numbers reported by HHS.  Throughout open enrollment, Cover Oregon has been reporting lower numbers than HHS has for Oregon, but it appears this is due to a delay in carrier reporting, and also an issue with policies that have been selected versus policies that have been paid.  Either way, the difference is small, and will likely work itself out within a few weeks of the end of open enrollment.

Tax season special enrollment period

Open enrollment has ended, but a limited enrollment period will run from March 15 to April 30 for people who were unaware of the ACA’s penalty for being uninsured in 2014, and who only find out that they owe the penalty when they file their taxes.  For everyone else however, enrollment in a health plan for 2015 (including off-exchange) now requires a qualifying event.

The ACA’s penalty for not having insurance does allow for one short gap in coverage of up to three months.  So people who enroll with an April 1 (or earlier) effective date will not face a penalty for 2015, as long as they keep their coverage in force the rest of the year.  To get an April 1 effective date during the special enrollment period described above (for those who owe the penalty for 2014), you’ll need to enroll ON March 15, as soon as the special enrollment period begins.  Enrollments submitted March 16 to April 15 will have coverage effective May 1, which will trigger a four-month prorated penalty.

Oracle fought to delay exchange dissolution

While the passage of SB1 had seemed inevitable given the number of lawmakers who supported it, Oracle fought to block the dissolution of the exchange, claiming that Cover Oregon owes them $23 million, and that the exchange was using Oracle’s copyrighted code without paying for it.  The state wanted to delay Oracle’s attempt to block dissolution of the exchange, because once Cover Oregon comes under control of DCBS, it will be a state agency that is immune from the copyright violation claim.  But if Cover Oregon continued to exist as its own legal entity, Oracle’s claim could be significant.

The legal battle between Oracle and Cover Oregon has been dragging on – without getting anywhere – for six months.  The case started out in the Marion County Circuit Court, but was later moved to a federal court.  On February 13, however, a US District Judge announced that the case would be moving back to the Marion County Circuit Court, and expressed dissatisfaction with the fact that no progress had been made in the case.

Lower rates for 2015

Oregon residents can visit oregonhealthrates.org to see detailed information about the rate review process and the average rates for 2015.  PricewaterhouseCooper LLC tracked 2015 rates throughout the fall, and comparing them with 2014 rates.  In Oregon, the weighted average across all 13 carriers (on and off-exchange) is a rate decrease of 2.5 percent.

And the Commonwealth Fund conducted an analysis of rates for a 40 year-old non-smoker, and found an average rate decrease of 5 percent in Oregon.

But for the cheapest silver plans from 2014, most areas of the state saw a rate hike of around 10 percent for 2015.  Consumers willing to shop around and switch to the new cheapest silver plan are seeing smaller increases – generally in the range of 6 percent.

Enrolling and re-enrolling for 2015

All 2014 policies that were purchased through Cover Oregon terminated on December 31, 2014.  Open enrollment began on November 15 and ended on February 15 (with extension, it lasted until February 22).  But in order to have seamless coverage, with a new plan taking effect January 1, Cover Oregon repeatedly announced that 2014 enrollees needed to re-enroll through HealthCare.gov between November 15 and December 15.

Somewhere between 65,000 and 77,000 people had private plans through Cover Oregon just prior to open enrollment, and all of them needed to re-enroll in order to retain their coverage for 2015 (in most states, auto-renewal is possible, but since Oregon has switched to Healthcare.gov, everyone needed to re-enroll).

Medicaid expansion

Oregon opted to expand Medicaid (Oregon Health Plan) under the ACA, and by mid-October 2013, 56,000 people had already signed up for Medicaid coverage, reducing the state’s uninsured population by 10 percent just two weeks after enrollment began on October 1.

But the state used a system known as Fast Track to enroll many of the newly-eligible people in 2014, basing their eligibility on enrollment in other programs like SNAP.  All of those newly-enrolled people had to re-apply at the end of 2014, and there’s currently a backlog of about 43,000 applications being processed by Oregon Health Plan

Despite the backlog of enrollments, Medicaid expansion in Oregon has certainly been an overall success.  As of January 1, 2015 total enrollment in Oregon Health Plan stood at 990,000.  Of those, 380,000 had enrolled since Medicaid was expanded on January 1, 2014, and the majority of them had completed their enrollment through Cover Oregon.

Successful transition to HealthCare.gov

Following months of efforts to fix the troubled website, Cover Oregon’s board voted on April 25 to switch to using Healthcare.gov rather than continue to try to repair the existing site.  The Cover Oregon website still exists, but redirect visitors to Healthcare.gov.

The supported state based marketplace (SSBM) model means that Cover Oregon will be working together with HHS, with the state retaining some functions and HealthCare.gov being utilized for exchange enrollment.  Tina Edlund, Director of the Oregon Health Agency, was selected in early May to lead the transition.

Following the state’s successful transition to Healthcare.gov for enrollment, the exchange announced in January that 61 employees – mostly in the call center – would be laid off in March and April.  The exchange will retain a staff of 58 people going forward in 2015.

An uncertain future

For now – despite the implementation of Senate Bill 1 –  Oregon has a SSBM, which means that even if the Supreme Court rules against the availability of premium tax credits in states with federally-run exchanges (a ruling is expected in June), tax credits will still be available in Oregon despite the fact that enrollment will be completed via HealthCare.gov.

Lawmakers were generally in agreement that the 2014 model for a fully state-run exchange needs to be revamped via legislative action, but they also do not want to simply turn the exchange over to the federal government, because losing the state-based aspect of the exchange would potentially mean tens of thousands of people would lose their subsidies if the Supreme Court rules that subsidies are only legal in state-run exchanges.

In mid-June, 2014 (after the exchange had decided to switch to Healthcare.gov for enrollment) Cover Oregon announced that they had selected a new executive director, Aaron Patnode.  The hiring of Patnode, who was previously a Kaiser Permanente manager, indicates that the exchange is still thinking long-term, and Patnode’s reputation as a problem solver and “turn-around artist” bodes well for the long-term success of the exchange as a SSBM.  It’s unclear whether DCBS will retain Patnode to continue to lead the exchange’s operations after the end of June (he’s overseeing the day-to-day operations through June 30, but official control of the exchange is now in the hands of DCBS, following Governor Brown’s signature on SB1).

Although in early December lawmakers were already discussing the process for doing away with the exchange, Patnode announced the next day that the exchange is working to offer a website for small businesses to purchase group coverage.  This is still under consideration, but if the state does decide to take that route – or to implement any technology changes that cost more than a million dollars – the legislature will have to approve of the actions in advance.  And it appears that Healthcare.gov will be the enrollment portal for individual applications indefinitely.

In addition to Patnode, the state also hired “corporate turnaround expert” Clyde Hamstreet earlier this year in an effort to right the failed exchange.  Hamstreet and two assistants worked throughout the summer and the exchange spent upwards of $600,000 on their services.  In a scathing report written in late August, Hamstreet noted that Cover Oregon was “in serious disarray” and had numerous organizational and leadership problems.

But Hamstreet also said that if Cover Oregon continued to exist, “its strengths will flourish.”  The long-term future of Cover Oregon and its governing organization is uncertain, although one of the possibilities suggested by Hamstreet is for the state to partner with a neighboring state to split the cost and administration of state-run exchange technology.

In February, amid news that Governor Kitzhaber was resigning, reports surfaced that indicated Hamstreet worked closely with Patricia McCaig, who was a top adviser for Kitzhaber’s reelection campaign last year.  It’s unclear whether the decision to shut down Cover Oregon was tied to the governor’s reelection strategy, but the issue is currently being investigated by a congressional committee.

Improved access to help online and over the phone

The exchange utilized three separate websites during open enrollment, but they are interoperable.  HealthCare.gov is the main enrollment platform for people applying for private plans and for income-based Medicaid.  CoverOregon.com is available to help people find local in-person assistance with enrollment.  In addition, OregonHealthcare.gov helps applicants who are eligible for Medicaid for reasons other than income (disability, pregnancy, etc.), and redirects visitors to HealthCare.gov for enrollment.

There were also two call centers available for residents seeking help over the phone.  The HealthCare.gov call center assist people with enrollment, and the state-run call center (which was all they had in 2014) is able to provide answers to general questions and help people find local in-person assistance.  But the exchange is laying off half of its workforce in March and April, mostly from the call center.

2014 progress despite challenges

Although the Cover Oregon website was largely regarded as a technological disaster in 2014, things are going much better in the 2015 open enrollment period that is utilizing Healthcare.gov.

Despite myriad technological problems, Cover Oregon had enrolled 105,661 people in private plans by November 3, 2014 (not all of those policies are still active; some enrollees never paid their premiums, and others have cancelled their coverage at some point during the year; significant attrition is always expected in the individual insurance market – the final total was likely somewhere between 65,000 and 77,000 in early November). Of the private plan enrollees, roughly 53 percent were uninsured prior to obtaining a policy through Cover Oregon.

And even with the tremendous technological difficulties experienced by the exchange, Oregon had the seventh highest drop in uninsured rate during the first half of 2014 according to a recent Gallup poll.  The state’s uninsured rate was 19.4 percent in 2013, and had fallen to 14 percent by mid-2014.

Uncovering what went wrong

The FBI and federal prosecutors have launched investigations into the failed exchange – which cost $248 million in tax dollars and was never able to enroll applicants entirely online.  In early June 2014, Governor John Kitzhaber asked Oregon Attorney General Ellen Rosenblum to take legal action against Oracle – the creator of the Cover Oregon website – in order to recover funds spent on the site.

But Oracle is fighting back, saying that officials at Cover Oregon and Oregon Health Authority are to blame for the debacle.  Both sides have sued each other, and the issue is highly contentious.  Following Clyde Hamstreet’s less-than-glowing report about the myriad problems at Cover Oregon, Oracle’s CEO Safra Catz has pointed to the report as evidence that Oracle is not to blame for the exchange’s catastrophic failure in 2014.  Catz asked Oregon’s lawmakers to assist with ending the lawsuit against Oracle, noting in late October that litigation is “not in the best interest of the state or its citizens.”

All things considered, the legal battle between Cover Oregon and Oracle appears to be one that is likely to drag on for quite some time.  As of the end of February 2015, there were four separate legal cases involving Oracle and Cover Oregon.

On February 18, 2014 four and a half months after open enrollment began, Cover Oregon’s website was finally functional enough for insurance agents and navigators to be able to process enrollments start to finish online.  Although the site was never fully functional for the general public to complete the entire enrollment process online, the availability of some electronic enrollment was a huge improvement after months of relying solely on paper applications.

Despite the fact that Cover Oregon was the only exchange relying solely on paper applications for the first four months of open enrollment, its total enrollment numbers for 2014 were around the middle of the road when compared with enrollment in other states – all of which were using much more efficient online applications for months.

Grandmothered plans can be renewed

Virtually all of the existing 2013 individual policies in Oregon were eligible for renewal into 2014.  Moda Health Plan Inc. and PacificSource Health Plans allowed existing policies to extend until the end of March.  And seven carriers allowed 2013 policies to be renewed until the end of 2014: Regence BlueCross BlueShield of Oregon, Kaiser Foundation Health Plan of the Northwest, Providence Health Plan, LifeWise Health Plan of Oregon, Health Net Health Plan of Oregon Inc., Time Insurance Co. and John Alden Life Insurance Co.

The renewal of 2013 plans into 2014 gave many Oregon residents in the individual market some breathing room as they waited for Cover Oregon’s website to improve.

Oregon is also permitting those pre-2014 plans to be renewed again this fall and remain in force throughout 2015, at each carrier’s discretion.

Exchange worked to cover risk pool members

The Oregon Medical Insurance Pool – a state run high risk pool – closed at the end of December, but the state implemented a temporary medical insurance program that automatically covered risk pool members who were not able to enroll in an exchange plan with a January 1 effective date.

The temporary plan remained in force until March 31, 2014 but ceased operation at that point.  Insureds who were still covered under the temporary program lost their coverage at the end of March, but the risk pool had been working closely with members to get them transitioned to new policies, so there were very few people still on the temporary program at that point.

Cover Oregon’s history

The Oregon legislature authorized a state-run health insurance exchange in 2011, and the exchange developed a formal business plan, which the Legislature approved in February 2012 as a final go-ahead for the exchange. The U.S. Department of Health and Human Services (HHS) gave conditional approval to Cover Oregon in December 2012. The exchange has a 2014 budget of $105.7 million, which will be covered with federal grant money, and $62.4 million budget in 2015 according to a Cover Oregon spokesperson.

Cover Oregon is overseen by a nine-member board of directors, two of which are non-voting members. The board receives input from the Individual and Employer Consumer Advisory Committee. The 19-member committee holds monthly meetings, which are open to the public. The Consumer Advisory Committee was mandated by the legislation that established the state’s exchange.

Committee members are selected by the board and must include individuals or employers who will use the exchange, individuals who will enroll in state medical assistance through the exchange, minority groups, and representatives of organizations that will people purchase insurance through the exchange. All geographic areas of the state must be represented.

Cover Oregon is acting as “active purchaser,” meaning it limits the number of health insurers that can participate in the exchange. Participating insurers are required to offer a bronze, silver and gold plan and have the option to offer additional plans.

Contact the Oregon exchange

Cover Oregon
855-CoverOR (855-268-3767)

More Oregon health insurance exchange links

State Exchange Profile: Oregon
The Henry J. Kaiser Family Foundation overview of Oregon’s progress toward creating a state health insurance exchange.