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Oregon health insurance marketplace: history and news of the state’s exchange

Five of six current insurers plan to remain on-exchange, but with some coverage area changes

Oregon has a state-run exchange, run by the Oregon Department of Consumer and Business Services (DCBS), but they’ve been using Healthcare.gov’s enrollment platform since the second open enrollment period. So the exchange is considered an SBE-FP (State-Based Exchange on the Federal Platform).

Oregon initially had a fully state-run exchange — Cover Oregon — but it was plagued with technological failures, and never worked as planned. As a result of the catastrophic software failures, the state was embroiled in two years of legal battles with Oracle, the vendor the built the exchange. But in September 2016, a settlement was reached that calls for Oracle to provide the state with a total of $100 million in cash, customer service support, and license agreements.

The federal government is charging SBE-FPs a fee equal to 1.5 percent of premiums for use of Healthcare.gov in 2017. They had proposed increasing the fee to 3 percent starting in 2018, but settled on 2 percent instead, with the increase to 3 percent delayed until 2019. Oregon has considered the possibility of switching back to having a fully-state-run exchange, and after reviewing bids from three technology vendors, DCBS put out a report in May 2016 detailing the pros and cons (and costs) of both options.

Ultimately, Oregon decided to continue to use Healthcare.gov, with plans to revisit this decision sometime in the next three to five years. They noted that the decisions was a toss-up, as it would have been a little more expensive to run their own exchange plantform, but would have enabled the state to have a more finely-tuned enrollment platform specific to Oregon’s needs. But they felt that they couldn’t go ahead with another significant change without it being clearly advantageous all-around.

Looking ahead to 2018: five insurers in the exchange, rate increases mostly lower than proposed

Oregon insurers were initially facing a May 1 deadline for filing rates for 2018, but the state pushed that out to May 15. That gave insurers more time to develop accurate rate projections based on the market stabilization rule that CMS finalized in mid-April, and to respond to any early-May developments in the ongoing debate (and lawsuit) around funding for the ACA’s cost-sharing subsidies (ultimately, the cost-sharing subsidy situation remained unresolved as of mid-May).

In addition to the instability caused by uncertainty surrounding cost-sharing subsidy funding, enforcement of the individual mandate is expected to be less robust, following President Trump’s first executive order. That, in turn, leads to a sicker pool of insureds, as healthy people will be much more likely than sick people to drop their coverage. In their actuarial memorandum that accompanied their rate filing, BridgeSpan noted that “the individual market is expected to contract due to weakening of the federal mandate to have health insurance. This will lead to a greater market-wide average morbidity.”

Providence noted something very similar in their actuarial memorandum, stating that “due to increasing market volatility and weakening of the individual mandate, PHP expects a market contraction where healthier individuals are more likely to forego coverage. This will result in an increase to the average morbidity of the single risk pool in 2018.”

Eight insurers initially submitted rates for 2018, although two of them — Regence BCBS and Health Net — only offer plans outside the exchange. And Atrio, which initially filed 2018 plans for two of the six counties where they currently offer coverage, later withdrew their individual and small group plans in order to focus instead on their Medicare products.

On June 30, the Oregon Department of Consumer and Business Services issued a press release explaining that they had reviewed the rate proposals and completed  preliminary rate decisions, although rates won’t be finalized until July 20. It’s noteworthy that the preliminarily approved rates are, for most insurers, significantly lower than the proposed rates. Much of this is due to the new Oregon Reinsurance Program, described below.

Five of the six insurers that offer plans in the exchange in 2017 are planning to continue to do so in 2018, but with some changes to coverage areas. State regulators have preliminarily approved the following average rate increases for 2018, although they could change again by the time rates are finalized (note that these are averages; actual rate changes can vary considerably for different plans offered by a single insurer):

  • BridgeSpan: 1.6 percent decrease (proposed rate change was a 17.2 percent increase). Plans are available state-wide, on and off-exchange in 2017, but the coverage area will be sharply reduced for 2018: BridgeSpan plans will only be available on-exchange in three counties: Clackamas, Multnomah, and Washington. Off-exchange plans will be available in rating area 6, which includes 15 counties. BridgeSpan will no longer offer PPOs; all plans will be EPOs. BridgeSpan’s membership as of February 2017 was 8,791; they expect it to decrease to 2,675 in 2018.
  • Kaiser Permanente: 14.8 percent increase (proposed change was a 12.44 percent increase, so the DCBS review resulted in higher-than-proposed rates for Kaiser). Plans are available in ten counties; Kaiser has 46,130 members in Oregon as of April 2017, but they expect that to grow to 59,000 in 2018, due to their increasingly competitive rates.
  • Moda: 4.7 percent increase (proposed change was a 13.1 percent increase). Moda was available state-wide in 2016, but is not available in Benton, Crook, Deschutes, Douglas, Jefferson, Kalamath, Lane, Lincoln, Linn, or Tillamook counties in 2017; For 2018, they will offer plans in 30 counties, and will once again have plans available in Kalamath, Jefferson, Crook, and Deschutes counties, per their filing description.
  • PacificSource: 2.8 percent increase (proposed change was a 6.9 percent increase). PacificSource was available state-wide in 2016, but coverage area was drastically reduced for 2017, and plans are currently only available in six counties: Clackamas, Crook, Deschutes, Jefferson, Multnomah, and Washington.
  • Providence Health Plan: 8.6 percent increase (proposed change was a 20.7 percent increase). Providence is available state-wide in 2017; they had 104,747 members in March 2017, but expect their 2018 membership to decline to 59,397.

Lane, Lincoln, and Tillamook counties currently only have one insurer — Providence — planning to offer coverage in the exchange in 2018. All three of those counties have two exchange insurers offering coverage in 2017, but BridgeSpan’s significant reduction in coverage area leaves Providence as the only insurer planning to offer coverage statewide on the exchange. The Oregon Department of Consumer and Business Services has said that they “will work with insurers during the rate review process to try to provide more choice in these areas” so planned coverage areas may change before open enrollment begins.

At ACA Signups, Charles Gaba calculated a weighted average proposed rate increase of 17.22 percent for Oregon’s individual market, including the off-exchange plans offered by Regence and Health Net. Once the preliminary rate changes were announced, Gaba calculated a new weighted average rate increase of just 8.5 percent. Final rates will be published in July.

Oregon Reinsurance Program results in single-digit rate increases for 2018

Oregon regulators noted in their preliminary rate decision announcement that the state’s new reinsurance program shaved six percentage points off the average individual market rate increases for 2018, although it added 1.5 percentage points to the small group rate increases (which are preliminarily approved with a weighted average increase of 8.2 percent, including the reinsurance fee).

The ACA included a federal reinsurance program, but it was temporary and only lasted through 2016 (the end of the reinsurance program was one reason premium increases were so large for 2017). Some other states have created their own reinsurance programs in an effort to stabilize their individual markets. Alaska’s reinsurnace program took effect in 2017, and is credited with keeping premium increases for 2017 in the single-digit range. Minnesota has created a reinsurance program for 2018, and Iowa has proposed one. All three of those states are seeking federal approval for 1332 waivers so that federal funding can be used for the state-based reinsurance. Oregon HB2391, passed by lawmakers in June, also calls for the state to seek a 1332 waiver so that federal funding can be used for the Oregon Reinsurance Program.

Lawmakers consider bill to give state additional regulatory authority if ACA changes at the federal level

Oregon H.B.2342 passed the House Rules Committee on May 12, by a 7-2 vote. If the legislation is enacted, it would grant the state the ability to take a variety of actions that may become necessary to stabilize the individual market, if and when federal changes are made to the ACA.

2017 enrollment

155,430 people had enrolled in private plans through the Oregon exchange during the 2017 open enrollment period. For perspective, 147,109 people enrolled in coverage through Oregon’s exchange during the 2016 open enrollment period. Enrollment in Oregon grew by 5.7 percent in 2017.

Across all the states that use HealthCare.gov, there was an overall average decline in enrollment, but Oregon ended up with fairly significant enrollment growth (the average decline in most other HealthCare.gov states is attributed to a variety of factors, including higher premiums, insurer exits, uncertainty about the future of health care reform, and the Trump Administration’s decision to cut back on advertising and outreach in the final week of open enrollment).

Open enrollment ended on January 31. Coverage for 2017 is now only available in most cases if you have a qualifying event (our qualifying events/special enrollment period section provides detailed explanations of how each qualifying event works; applicants should be prepared to submit proof of their qualifying event at the time they enroll). But Native Americans can enroll year-round, as can anyone eligible for Medicaid/CHIP.

Oregon’s exchange and the Trump Administration

President Trump and GOP lawmakers have spent the early part of 2017 working towards repealing and replacing the ACA. Their bill of choice, the American Health Care Act (AHCA) was introduced in early March but pulled later that month when it was clear that there wasn’t enough support in the house to pass it. It was soon back on the table, and lawmakers have spent the ensuing weeks working on compromises and amendments in an effort to gain more votes. By the end of April, the ultra-conservative House Freedom Caucus was on board with the latest version of the bill, but moderate Republicans were expressing skepticism. The future of the AHCA — and the ACA — is still very much up in the air.

HHS reported that 403,000 people in Oregon gained health insurance coverage from 2010 to 2015, as a result of the ACA. That number has continued to increase, as the uninsured rate has continued to decline. If the ACA is repealed and not replaced with something equally robust, many of those people will lose their coverage.

Oregon expanded Medicaid under the ACA, and in the first three years of expanded coverage, more than 400,000 people were added to Oregon’s Medicaid program. That’s in addition to the 132,000 people who had coverage in the exchange in 2016 (of those, about 72 percent were receiving ACA subsidies to make coverage affordable; without the subsidies, many would not be able to afford the premiums).

There is no doubt that some of them would lose coverage under the AHCA. The Congressional Budget Office projected that the number of uninsured people in the U.S. would grow by 24 million over the next decade if the AHCA is enacted. The left-leaning Center for American Progress estimates that more than 299,000 of them are in Oregon.

Lawmakers introduce bill to protect reproductive health coverage

With concerns swirling about the future of the ACA — including its provision that covers the full range of female contraceptive options at no cost — lawmakers across the country are scrambling to chart a course forward. Four Democratic Representatives in Oregon prefiled H.B.2232 in January 2017 (the legislature didn’t convene until February 1; the bill couldn’t officially be introduced until the start of the legislative session), in an effort to preserve reproductive health care coverage in Oregon, even if the ACA is repealed. By late April, however, the bill had not advanced in the Oregon legislature. The legislative session in Oregon ends in July.

If enacted, H.B.2232 would apply to any plans regulated by the state, which includes the individual market, Oregon Medicaid (Oregon Health Plan, overseen by Oregon Health Authority), and fully-insured group plans. But self-insured group plans are not subject to state regulations; instead, they’re regulated under federal law via the Employee Retirement Income Security Act (ERISA). And the majority of very large employers self-insure their workforce, as opposed to purchasing fully-insured group plans. In Oregon, 27.7 percent of the state’s population is covered under state-regulated plans, while 21.6 percent are covered under federally-regulated self-insured plans (the rest are on Medicare, Medicaid, TRICARE, and other federal health programs).

H.B.2232 would require health plans regulated by the state to cover a wide range of reproductive health care — including the full range of FDA-approved contraceptives at no cost to the insured. The ACA currently requires that, but only for female contraceptives. Vasectomies are not required to be covered under the ACA, although female sterilization is. If enacted, Oregon’s measure would include coverage for voluntary sterilization, and does not contain any reference to male vs. female coverage.

H.B.2232 would prevent state-regulated plans from discriminating based on gender or gender identity (Section 1557 of the ACA currently prohibits discrimination), and would also require plans to cover abortion, although there would be an exemption for religious employers to allow them to opt out of contraceptive and abortion coverage (not only does the ACA not require coverage for abortions, it also requires each state’s exchange to include at least one plan that doesn’t cover abortions).

H.B.2232 would also provide reproductive health care regardless of immigration status. The legislation “requires Oregon Health Authority to implement a program to reimburse costs of services, drugs, devices, products and procedures related to reproductive health provided to individuals who can become pregnant and who would be eligible for medical assistance if not for certain federal requirements.” Those “certain federal requirements” refer to the fact that federal Medicaid funds cannot be used to provide services for undocumented immigrants — or even documented immigrants who have been in the U.S. for less than five years.

Oregon is already at the forefront of ensuring access to contraception: In 2016, the state began requiring pharmacies to provide on-demand birth control pills and patches, and also began requiring health insurers to cover a 12-month supply of contraception at one time, rather than requiring refills throughout the year.

2017 carriers: At least two in every county

At the start of 2016, there were ten insurers offering plans through Oregon’s exchange. Six of them are offering plans in the exchange in 2017 (one of the non-returning plans, Trillium, only offered plans in one county in 2016, and another, Zoom, only offered plans in two counties).

In addition to the carriers that did not return to the exchange (Oregon Health CO-OP, LifeWise, Zoom, and Trillium), many counties outside the I-5 corridor were facing the possibility of only having one carrier offering plans, as several existing carriers had planned to reduce their coverage area.

But regulators worked with carriers to address the problem, and by August, BridgeSpan and Providence Health Plan (in addition to Regence BCBS outside the exchange) had agreed to continue to offer plans statewide, but with higher premiums.

In the exchange market, final service area changes 2017 are as follows:

  • Atrio Health Plans (available in six counties in 2017).
  • BridgeSpan (available state-wide in 2017).
  • Kaiser Permanente (available in ten counties in 2016 and 2017).
  • Moda (was available state-wide in 2016, but is not available in Benton, Crook, Deschutes, Douglas, Jefferson, Kalamath, Lane, Lincoln, Linn, or Tillamook counties in 2017).
  • PacificSource (was available state-wide in 2016, but coverage area was drastically reduced for 2017, and plans are only available in six counties: Clackamas, Crook, Deschutes, Jefferson, Multnomah, and Washington).
  • Providence Health Plan (available state-wide in 2017).

So every county in Oregon continues to have at least two carriers offering plans in the exchange for 2017, and most have at least three.

There are two individual market carriers – Health Net and Regence BCBS – that do not offer plans in the exchange in Oregon. Both offer off-exchange plans state-wide in 2017. Regence BCBS had initially intended to drop ten counties from its coverage area at the end of 2016, but subsequently agreed to continue to offer state-wide coverage outside the exchange.

Rate increases for 2017 approved, then revised

In June 2016, Oregon regulators provided tentative approval for rate changes that will take effect in January 2017. They were reviewed throughout the rest of the month, and a public commentary period was open through Friday, June 24. The final rates became available July 1 (they include Oregon Health CO-OP, because the decision had not yet been made to close the CO-OP).

But when four carriers (Atrio, BridgeSpan, Providence, and — off-exchange — Regence) agreed in August to cover a broader service area than they had originally intended for 2017, state regulators also allowed them to further increase their premiums due to the increased risk they would be shouldering. Final approved average rate increases for Oregon’s exchange carriers are as follows:

  • Atrio Health Plans: 29 percent (up from the originally-approved 20.8 percent).
  • BridgeSpan: 23 percent (up from the originally-approved 18.9 percent).
  • Kaiser Permanente: 14.5 percent (range is from 10.9 to 22 percent).
  • Moda: 29.3 percent (lower than the 32.3 percent average rate increase Moda had requested).
  • PacificSource: 15.2 percent.
  • Providence Health Plan: 29.6 percent (this is what Providence originally requested, but regulators had initially approved 24.1 percent, and reconsidered when Providence agreed to continue to offer plans state-wide in 2017)

Ethan Baldwin, an Oregon’s Department of Consumer and Business Services rate review analyst, noted that state regulators “do have the authority to reject rate increases, but that doesn’t happen. I can’t remember the last time that’s happened.”

For specific areas of the state, regulators have put together charts showing average rates for enrollees of varying ages in 2017.

In the individual market, the average rate increases vary from 9.8 percent for Health Net, to 29.6 percent for Providence (with Moda and Atrio very close to that upper range). Health Net does not offer plans in the exchange though, so the on-exchange rate increases range from 14.5 percent (Kaiser) to 29.6 percent.

It’s worth noting that in the small group market in Oregon, average rates are expected to decrease by about half a percent for 2017.

Standardized plans in Oregon

HealthCare.gov debuted optional “Simple Choice” standardized plans for 2017, but some of the state-run exchanges — including Oregon’s — had implemented standardized health plans in previous years. In 2013, the Commonwealth Fund reported that Cover Oregon (a fully state-run exchange at that point) was allowing health insurers to offer, at each metal level, one standardized plan, two non-standardized plans, and two “innovative” plan designs.

Coverage provided by Gold, Silver, and Bronze standardized plans in Oregon in 2017 is detailed here.

SHOP exchange delayed until 2019

Because of the technology problems that Oregon experienced early-on, their focus was on getting an adequate individual market exchange established. The small group exchange (SHOP) was pushed to the back burner, and in 2016, its implementation was delayed another two years. It’s now expected to be operational by 2019.

Small businesses in Oregon can purchase SHOP-certified plans directly from the participating insurers. In order to qualify for the SHOP tax credits, employers must select from among the SHOP-certified plans (here’s the list for 2017).

Oregon cannot use Healthcare.gov’s SHOP exchange platform because the state requires community rating in the small group market, with no age-based variation in premiums. That’s incompatible with Healthcare.gov’s platform, so the state will have to eventually run their own system for small businesses. For now, employers continue to purchase SHOP-certified plans directly from insurers.

Oregon Health CO-OP closed July 31, 2016; in liquidation as of 2017

On July 8, 2016 the Oregon Department of Consumer and Business Services announced that Oregon Health CO-OP would cease operations as of July 31. Oregon started out with two CO-OPs in 2014, but the other already failed at the end of 2015.

At that point, there were 11,800 people with individual market coverage through Oregon Health CO-OP. A special enrollment period began on July 11 for Oregon Health CO-OP members to select coverage from another carrier. But shortly after it began, state officials in Oregon advised CO-OP members to wait a few more days before selecting a new plan, as the state was trying to work out a solution that would allow members to switch to a different plan with full credit for the out-of-pocket expenses they’ve incurred thus far in 2016.

Ultimately, their efforts were successful. On July 18, the Oregon Department of Consumer and Business Services announced that the other carriers in the individual market in Oregon had agreed to apply CO-OP members’ already-accrued out-of-pocket expenses towards their new plans that took effect August 1.

Typically, when health insurance carriers are forced to shut down, the transition happens at the end of the year, so out-of-pocket expenses would be resetting anyway. Oregon Health CO-OP’s situation was unusual, in that it shut down mid-year. But in a similar situation, when New York‘s CO-OP shut down in November 2015, the state worked out a deal with three other carriers to allow members to switch to a new plan without having to start over on their out-of-pocket for the year.

There were also about 8,800 Oregon Health CO-OP enrollees in the small and large group market who had to transition to new plans with August 1 effective dates. The state’s notification about out-of-pocket expense carry-over did not apply to small groups; they noted that small group members may have to start over on their out-of-pocket exposure, depending on the carrier that they choose for their replacement coverage.

In March 2017, the state filed a petition for liquidation in order to liquidate Oregon Health CO-OP’s remaining assets and distribute the money to creditors.

LifeWise exited Oregon at the end of 2016

In April 2016, LifeWise Health Plan of Oregon announced that they would exit the state at the end of 2016, including both the individual and group market. Enrollees were able to keep their coverage through December 31, but had to pick a different plan for 2017 (if they failed to do so, the exchange would auto-enroll them into a plan from another carrier).

LifeWise offered plans state-wide in the Oregon exchange in 2016.

Zoom+ Performance Health Plan exited exchange at the end of 2016; closing entirely at the end of 2017 and is now in receivership

Zoom notified DCBS in August 2016 that they would exit the Oregon exchange at the end of 2016. Zoom had been the only exchange carrier that had planned to increase its coverage area for 2017 (they already offered plans in Clackamas and Multnomah counties in 2016, but had planned to add Washington county to their coverage area in 2017). Instead, they only offered off-exchange plans in those three counties in 2017.

In 2016, Zoom had 839 on-exchange members, and 871 off-exchange.  Their total individual market enrollment stood at 735 (all off-exchange) as of early April 2017. According to the Oregon Division of Financial Regulation, Zoom’s total membership in 2017, including small group enrollment, is under 2,000 people.

In early April, Zoom Health Plan notified Oregon regulators that they intended to close entirely at the end of 2017. They were also placed under supervision, and insurance regulators have been on-site throughout much of April, overseeing operations. On April 21, state regulators moved to place Zoom Health Plan into receivership. The state has filed suit against the insurer to recoup $3 million in claims that should have been paid (note that the receivership does not impact Zoom+ Care clinics in Oregon; only the insurance plan is in receivership).

All Zoom Health members will need to secure new coverage for 2018, as the insurer will close completely at the end of 2017.

Trillium exited Oregon at the end of 2016

Trillium (which primarily provides Medicaid managed care) offered on-exchange plans in 2016, but only in Lane county. In June 2016, the state approved the sale of Trillium to Missouri-based Centene, and Trillium did not file rates to sell plans in any Oregon county for 2017.

Oregon reconsidered a state-run enrollment platform; opted to stay with Healthcare.gov

Oregon launched a state-run exchange in October 2013, but it was a failure from the start. It never worked properly, and the state opted to switch to the Healthcare.gov enrollment platform starting with 2015 enrollments. But Oregon has retained control over the exchange with the Oregon Department of Consumer and Business Services (DCBS) responsible for exchange oversight.

Oregon charges insurers a fee of $9.66 per-member per-month to pay for the exchange, but has thus far been able to use Healthcare.gov without pay any additional fees to the federal government. That will change starting in 2017 however.

In the fall of 2015, HHS had proposed an administrative fee of 3 percent of premiums for states like Oregon that have their own exchange but use Healthcare.gov’s enrollment platform. DCBS Director Allen submitted comments to HHS regarding the proposal, and noted that it would make more sense to have the fee be smaller, based on the number of enrollees serviced by the platform. He also explained that it would make more sense to assess the fee as a per-member amount rather than a percentage of premium, in order to avoid the impression that HHS benefits when premiums increase.

But Allen also noted that Oregon was considering ceasing their dependence on Healthcare.gov and once again running their own enrollment platform – albeit by purchasing software with a “demonstrated track record” from another state with a highly-functional state-run exchange.

In the 2017 Benefit and Payment Parameters, HHS ultimately settled on a fee of 1.5 percent of premiums in 2017 for states like Oregon that manage their own exchanges but use the Healthcare.gov enrollment platform. But starting in 2018, HHS has proposed increasing the fee to 3 percent of premiums.

Oregon is reducing the per-member-per-month fee that the state currently charges to $6 (down from the current $9.66), but that will be in addition to the 1.5 percent of premiums fee that will be assessed by Healthcare.gov. When the two fees are combined, it’s likely that carriers will end up paying slightly more in fees in 2017 than they do in 2016.

Once the expected 3 percent fee for Healthcare.gov takes effect in 2018, even with the additional $6 per member per month fee, Oregon’s exchange is facing the possibility of a budget shortfall of $3.5 million.

Oregon put out a request for bids from IT vendors who could build a new enrollment platform that Oregon could begin using, possibly as early as 2018. Four companies submitted proposals, and all of them have successful experience working with other state-run exchange or Healthcare.gov. Oregon received proposals from hCentive, Vimo Inc., Softheon Inc., and New Fields Technologies LLC, although the DCBS report in May indicated that one of the proposals “did not meet minimum requirements” and was eliminated from consideration.

Ultimately, the state has decided to continue to use Healthcare.gov’s enrollment platform for the time being, and will revisit the issue in another three to five years.

Nevada and New Mexico – both of which also have federally-supported state-based exchanges – have echoed the concern that an eventual 3 percent fee to continue to use Healthcare.gov is excessive, and have said that they will consider other alternatives if that ends up being the case. Healthcare.gov charges 3.5 percent of premiums in states where the federal government runs the entire exchange, but states with federally-supported state-based exchanges already have their own fees that are assessed to cover the exchange administration conducted by the state. Tacking on an additional 3 percent charge would make total exchange admin costs more expensive in federally-supported state-based exchanges than it is in states where the exchange is fully state-run or fully federally-run.

147k enrolled for 2016, plus at least 109k off-exchange

During the 2016 open enrollment period, 147,109 people enrolled in private plans through Oregon’s federally-supported state-based exchange. 45 percent of the enrollees were new to the exchange for 2016, and the rest already had coverage in 2015. Enrollments that had been cancelled as of February 1 had already been subtracted from the total, so 147,109 was the total as of February 1 with attrition by that point already taken into account.

At the end of the 2015 open enrollment period, total of 112,024 Oregon residents had enrolled in private plans. The 31 percent increase for 2016 put Oregon near the top of the list in terms of year-over-year percentage growth in enrollment.

In 2015, 79 percent of Oregon exchange enrollees were were receiving advance premium tax credits (subsidies). For 2016, that had dropped to 71 percent. But those percentages amount to about 88,500 enrollees in 2015, versus about 104,500 in 2016. Substantial rate hikes for 2016 (more details below) mean that more people qualify for premium subsidies – and subsidies are larger – in 2016.

As expected in the individual market, some enrollees don’t pay their premiums, and some cancel their coverage before the end of the year. By March 31, 2016, effectuated enrollment in the Oregon exchange stood at 131,167, and almost 73 percent were receiving subsidies. According to The Lund Report, enrollment had dropped to 125,000 by October 2016 (gradual attrition throughout the year is commonplace now that the bulk of the enrollments are limited to open enrollment).

In addition to the on-exchange enrollments, 109,000 people had enrolled in off-exchange plans for 2016 in Oregon by mid-January. Off-exchange plans are fully-compliant with the ACA, but subsidies are not available to cover any portion of the premium for off-exchange plans.

Moda remains in the individual market

Moda Health Plan Inc. had a tumultuous couple weeks in early 2016. But they are now are back in the individual market in Oregon and Alaska, renewing coverage and selling new plans. For 2017, they’re expected to continue selling plans in Oregon’s individual market, albeit with an average rate increase of 29.3 percent (they will exit Alaska’s exchange at the end of 2016). Here’s what’s gone on so far:

On January 28, the Oregon Division of Financial Regulation placed Moda under supervision, and ordered the carrier to cease issuing or renewing individual plans, or enrolling new groups. At that point, Moda had until January 29 to propose a new business plan that would either increase reserves or reduce operations.

That same day, Moda said that they would exit the individual market in both Oregon and Alaska in an effort to stem the losses they were incurring. In the first three quarters of 2015, Moda lost $30 million, and their capital reserves dropped from $120 million to $53 million. The carrier had been dominant in the individual market in 2014 and 2015, with plans priced lower than most of the competition. As of September 2015, Moda covered about 95,000 Oregon residents with individual plans. But Moda’s average rate increase for 2016 in Oregon was more than 25 percent, and enrollment in their individual market plans has dropped to 67,000.

On February 8, regulators in Alaska and Oregon reached an agreement with Moda that allowed the carrier to resume selling and renewing coverage in the individual markets in both states. Part of the agreement was a commitment from Moda to continue to service individual market policy-holders until at least the end of 2016.

Ultimately, Moda opted to exit Alaska’s individual market at the end of 2016, but remain in Oregon. For 2017, Moda proposed an average rate increase of 32.3 percent in Oregon, but regulators reduced that to 29.3 percent.

Moda’s CEO indicated that claims costs in the individual market have been higher than anticipated. And the risk corridor shortfall in October 2015 – which was a significant factor in the failure of Health Republic Insurance last fall – has been implicated in the excessive losses Moda is facing. In October 2015, Moda exited the market in Washington and California, in order to focus on Oregon and Alaska.

2016: Average pre-subsidy premium up $49; after subsidies, increase only $1

Once open enrollment was over and plan selections had been made, HHS announced that the average pre-subsidy premium in the Oregon exchange in 2016 is $392/month. That’s an increase of $49 over last year’s $343 average. But when premium subsidies are taken into consideration, there’s virtually no difference in terms of what subsidy-eligible enrollees are paying for their coverage: In 2015, the average after-subsidy premium was $141/month, and in 2016, it’s $142/month.

Of course, that only applies to the people who are receiving premium subsidies. And while that’s the majority (71 percent) of the enrollees, the other 29 percent of enrollees are paying full price for their coverage in 2016. For those enrollees, coverage is certainly more expensive in most cases than it was in 2015.

Although rates are considerably higher in Oregon in 2016, it’s important to remember that average rates in the state actually decreased from 2014 to 2015, which means that Oregon residents are in the same position they’d have been in if the state had experienced more modest rate hikes for both 2015 and 2016.

For sample rates based on age and region, you can visit Oregon Health Rates.  The site also has information about the rate review process and public hearings on rates.

24% weighted average rate increase for 2016

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 in 2015, 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 Health Net (off-exchange), 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, 2015, 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 came in at 24.24 percent for 2016, although the small group market had a weighted average rate increase of only about 2.5 percent. But Health Republic Insurance was going to have a 37.8 percent average rate increase, so although all of their enrollees had to switch to new carriers for 2016, the result is a lower overall average rate increase in the Oregon exchange. The difference isn’t dramatic however, since Health Republic Insurance had a small market share in 2015.

Moda’s rate increase for 2016 was more than 25 percent, which is higher than six other carriers. Nearly 30,000 of their individual market enrollees had already switched to other carriers by late January, but those who remained with Moda can continue to do so for the foreseeable future.

The 2016 rate increase in Oregon was certainly steep, but as noted above, subsidies are absorbing the brunt of the rate hike for eligible enrollees, as long as they shopped 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 ranged from 8.3 percent to 37.1 percent, so it was clearly beneficial to shop around before settling on a plan for 2016.

Health Republic Insurance fails

In mid-October 2015, Health Republic Insurance – one of two ACA-created CO-OPs in Oregon – announced that they would not offer plans for sale in 2016, and that their existing 15,000 members (including employees of 800 small businesses) would need to find coverage from another carrier for 2016.

With this announcement, Health Republic Insurance became the eighth CO-OP to fail, and the fourth as a result of the risk corridor shortfall that was announced on October 1 (WINhealth, a Wyoming carrier, also shut down as a result of the risk corridor shortfall, and in Kansas, Coventry exited the exchange at the end of 2015 due to the risk corridor shortfall). In all, 10 CO-OPs closed their doors on December 31, and another – Health Republic in New York – closed at the end of November.

General open enrollment ended on January 31, but loss of coverage triggers a 60 day special enrollment period. Former Health Republic members had until the end of February to pick a new plan, although they had a gap in coverage if they didn’t enroll in a new plan prior to the start of January, as there’s no provision to allow for retroactive coverage during the special enrollment period.

Carrier losses mounted in 2015

Rates for 2016 were established based on 2014 claims data, and were already set by mid-2015. But although rates increased substantially for 2016 based on 2014’s losses, most of the health insurers that offer plans in the Oregon exchange are losing even more more in 2015 than they did in 2014.

Ten insurers are offering medical plans through Oregon’s exchange for 2016. And six of them were losing money in 2015 as of the end of the third quarter. Total losses for eight insurers (including Health Republic along with Health Net, which only offers plans outside the exchange) reached $127 million in the first three quarters of 2015, which was four and a half times higher than their total losses in the first three quarters of 2014 (about $28 million).

Moda’s losses were the most significant among the eight carriers; Moda is also the carrier with the highest number of ACA-compliant plans in Oregon, including both on and off-exchange enrollments during the 2015 open enrollment period.

Grandmothered plans ended

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 had a non-ACA-compliant, non-grandfathered plan, had to select new coverage for 2016.

Oregon is one of two states – the other is Colorado – where grandmothered plans were allowed to remain in force in 2015, but had to be replaced by ACA-compliant coverage for 2016.

Uninsured rate more than halved since 2013

According to Gallup data, the uninsured rate in Oregon in 2013 was about 19.4 percent.  By mid-2015, it had dropped to 8.8 percent.  That’s well below the national average of 11.7 percent, but about the same as the average among states that established their own exchanges and expanded Medicaid (8.9 percent).  Oregon did both, but its exchange was generally regarded as a failure, and is now operating as a federally-supported state based marketplace.

Exchange dissolution complete

Oregon was one of the states that initially opted to run its own exchange, but the state-based enrollment system never worked properly.  Following months of efforts to fix the troubled website, Cover Oregon’s board voted on April 25, 2014 to switch to using Healthcare.gov rather than continue to try to repair the existing site.  The supported state based marketplace (SSBM) model means that Oregon works together with HHS, with the state retaining some functions and HealthCare.gov being utilized for exchange enrollment.

On March 6, 2015, Oregon Governor Kate Brown signed Senate Bill 1 into law. The legislation dissolved Cover Oregon and its board of directors, and transfered 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, 2015.  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.”

The Cover Oregon website also ceased to exist at the end of June. Instead, the URL now redirects visitors to OregonHealthcare.gov. From that site, residents can enroll in Medicaid if eligible, or will be redirected to Healthcare.gov to enroll in a private plan.

As of early 2016, the decision is still up in the air as far as whether Oregon will move forward with a new state-based exchange website/enrollment platform or to continue to use Healthcare.gov.

Cover Oregon and Governor Kitzhaber’s resignation

In February 2015, 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 were 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.

In May 2016, Republicans on a US House of Representatives committee had asked the Justice Department and the Oregon Attorney General to conduct a criminal investigation into what exactly transpired with Cover Oregon. In a response to the allegations, former Governor Kitzhaber reiterated his position that his re-election campaign had nothing to do with the handling of Cover Oregon, although he noted that there was some mismanagement on the part of the state.

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 came under control of DCBS, it became a state agency that is immune from the copyright violation claim.  But if Cover Oregon had continued to exist as its own legal entity, Oracle’s claim could be significant.  Nonetheless, the copyright infringement case is ongoing as of September.

The legal battle between Oracle and Cover Oregon has been dragging on – without getting anywhere – for 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.

2015 Oregon enrollment

All 2014 policies that were purchased through Cover Oregon terminated on December 31, 2014.  Open enrollment for 2015 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 the 2015 open enrollment, and all of them needed to re-enroll in order to retain their coverage for 2015 (in most states, auto-renewal was possible, but since Oregon switched to Healthcare.gov, everyone needed to re-enroll).

As of February 22, 2015, a total of 113,219 Oregon residents had enrolled in private plans through the exchange (when the official HHS report was published, it showed 112,024 enrollees in Oregon for 2015).

In addition, another 102,232 people 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 enrolled in ACA-compliant individual private plans during the 2015 open enrollment period. That total had grown to 220,500 by April 21, although the latter number didn’t break out on-exchange versus off-exchange enrollments.

As of April 21,2015, 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.

Lower rates for 2015

Although rates are going up considerably for 2016, that was not the case last year.  PricewaterhouseCooper LLC tracked 2015 rates throughout the fall of 2014, and comparing them with 2014 rates.  In Oregon, the weighted average across all 13 carriers (on and off-exchange) was 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 saw smaller increases – generally in the range of 6 percent.

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, which created 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 September 2015 total enrollment in Oregon Health Plan stood at 1,055,198. As of June 2015, 386,000 Oregon Health Plan members were newly eligible under the expanded guidelines, and the majority of them had completed their enrollment through Cover Oregon. It’s notable that Oregon had predicted about 222,700 newly-eligible enrollees by June 2015, so the actual enrollment number has far surpassed expectations.

Previous efforts to revive Cover Oregon

After a disastrous first open enrollment period, lawmakers were generally in agreement that the 2014 model for a fully state-run exchange needed to be revamped via legislative action.  But they also did not want to simply turn the exchange over to the federal government, because losing the state-based aspect of the exchange could have potentially meant tens of thousands of people losing their subsidies if the Supreme Court had ruled that subsidies are only legal in state-run exchanges (in June 2015, the Supreme Court ruled that subsidies are legal in every state, so that is no longer an issue).

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, indicated that the exchange was still thinking long-term, given Patnode’s reputation as a problem solver and “turn-around artist.”  In early December 2014, when lawmakers were already discussing the process for doing away with the exchange, Patnode announced that the exchange was working to offer a website for small businesses to purchase group coverage.

In addition to Patnode, the state also hired “corporate turnaround expert” Clyde Hamstreet in 2014 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.”  One of the possibilities suggested by Hamstreet was for the state to partner with a neighboring state to split the cost and administration of state-run exchange technology.

In February 2015, 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.

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 $300 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.

Exchange worked to cover risk pool members

The Oregon Medical Insurance Pool – a state run high risk pool – closed at the end of December 2013, 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.

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

Before its dissolution, Cover Oregon acted as “active purchaser,” meaning it limited the number of health insurers that could participate in the exchange. Participating insurers were required to offer a bronze, silver and gold plan and had the option to offer additional plans.

Contact the Oregon exchange

OregonHealthcare.gov

Healthcare.gov (call center: 1-800-318-2596)

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.

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