New public health care for 100,000 Oregonians would raise private insurance costs

A new publicly funded insurance plan is headed toward the final step it needs for state approval, in spite of concerns about the impact it will have on Oregon’s health insurance marketplace for individuals and small businesses.

The idea is for the new insurance program to be a lot like the Oregon Health Plan, Oregon’s version of Medicaid: Free health care, provided by Coordinated Care Organizations, with no copays, monthly premiums, or out-of-pocket costs.

It will cover people who earn 138% to 200% of the federal poverty level. That’s too much to qualify for the Oregon Health Plan, but too little to easily afford private insurance. A single person would qualify with an income between $20,000 and $29,000.

The Oregon Health Authority estimates 100,000 people will qualify for the new plan, which is called a Basic Health Program, or BHP. The program is a rarely used feature of the Affordable Care Act and is primarily paid for with federal dollars that otherwise goes to pay to subsidize their marketplace plans. Oregon public health officials say it will help solve the problem of people who churn on and off Medicaid due to small changes in their income. And it will reduce the state’s uninsured rate, according to OHA.

But it comes with a downside. OHA expects that launching the program will drive up the monthly cost of health care for many people who buy insurance from the individual and small business marketplace (healthcare.gov).

“Rather than expanding access, this overly complex and untested endeavor could result in more Oregonians no longer able to afford coverage,” wrote Jeff Collins, President of Kaiser Permanente of the Northwest, in a public comment about the plan.

Leaders of Cambia, the company behind the insurance plans Regence BlueCross BlueShield of Oregon and BridgeSpan, also objected to the plan. The company used the example of a family of two adults making $78,880 a year (400% of the federal poverty level) who could see their premiums increase by $4,800 a year under the new plan.

“Most families could not absorb this level of insurance price increase in light of increasing rent, food prices, gas prices, and other inflationary pressures, and many may become uninsured,” wrote Mary Anne Cooper, Cambia’s director of public affairs and government relations.

In April, OHA commissioned an updated analysis from independent experts to help the agency predict how significant those cost increases will be.

That study predicted that faced with those costs, about 1,800 people will become uninsured because they will no longer be able to afford the higher premiums. And 5,100 people will downgrade their coverage, switching to plans that cost less per month, but could leave them with higher medical bills.

OPB received the full analysis through a public records request.

In public meetings and interviews, OHA staff have defended the Basic Health Program. They’ve said that the premium increases won’t take place all at once, but will be spread out over several years.

The Oregon Health Policy Board, the oversight body for the Oregon Health Authority, was scheduled to vote this week on submitting the state’s Basic Health Program Blueprint, for federal review.

Now, OHA says it has delayed that vote and submitting the blueprint to the feds, until Sept. 12.

The Oregon Health Policy Board will still meet Tuesday to review public comments on the BHP and again on July 18 for a deeper discussion of the unintended negative consequences for the marketplace.

The timing of the Basic Health Program launch is a critical detail.

The program is intended to catch Oregonians who will otherwise be losing Medicaid coverage as federal officials ramp down higher payments that states received during the pandemic. It needs to launch by July 2024. If the program doesn’t launch on time, more people will get kicked off Medicaid — or the state health authority will need to find a lot more state dollars to keep them enrolled.

OHA is required to formally consult with Oregon’s nine federally recognized tribes over any changes to the state’s Medicaid program or health insurance marketplace. Health Authority leaders say they have delayed the vote to accommodate the dates tribes have requested for consultation on the program.

OHA spokesperson Amy Bacher said with the delay, the agency anticipates getting federal approval by February.

Why would Oregon create a Basic Health Program?

Staff at the Oregon Health Authority proposed creating a Basic Health Program last year as they began to look ahead to the end of the COVID-19 pandemic. During the public health emergency, the feds had stopped annual income checks for people on Medicaid, allowing them to stay on even if they no longer met the program’s poverty threshold.

State health officials brought data to the Oregon legislature showing the impact of that pandemic policy: fewer people “churning” on and off Medicaid. Before the pandemic, more than a third of people enrolling in the Oregon Health Plan were repeat customers who’d been on it within the past year. By 2021, that had fallen to just 8%.

Medicaid churn is a longstanding problem nationally. It often affects working-age adults making around minimum wage with irregular hours or multiple part-time jobs. Their earnings are right around the eligibility limit for Medicaid — and they can lose health insurance when their income goes up a little.

Purchasing individual coverage may be too expensive or impractical for people in these situations, and often people end up back on Medicaid within months when their income falls again.

In December, a task force created by the state legislature recommended the agency move forward and seek federal approval.

Many of the people who will qualify for it — an estimated 55,000 Oregonians — are currently enrolled in the Oregon Health Plan, thanks to a temporary expansion that’s allowing people to stay on Medicaid even if their income has gone up a little.

But the launch will also move about 35,000 people and tens of millions in federal funding out of the state’s individual marketplace.

Over time, that will drive up the monthly payments for some people buying individual insurance who don’t qualify for the new plan.

Essentially, many more poor people in Oregon will have stable, publicly funded health care but it comes at the cost of some middle-class Oregonians paying more for private health insurance each month.

The reason those premium increases will go into effect is driven by how the marketplace, and federal subsidies, will shift when the poorest consumers leave. After taking into account government subsidies, the cost of silver plans won’t change much, while bronze and gold plans will be more expensive.

Oregon attempted to get around the problem by asking the federal government to change the formula for how subsidies are calculated for Oregonians who get their insurance through the healthcare.gov marketplace. Records show the feds denied that request in late January, saying it wasn’t technically feasible.

OHA staff considered some other options but concluded they were too expensive for the state. When state lawmakers authorized the agency to pursue a Basic Health Program, they provided $120 million in one-time funding to help with the transition period and the launch but made it clear they weren’t providing any new ongoing state funding for it.

For most consumers on bronze and gold plans, the predicted increases are around $25 per month, but for about 10% of the consumers in the private insurance marketplace, monthly payments could go up by $100 or more.

People who have higher incomes and those 55 and older are the most likely to see their insurance premiums rise by $100 dollars a month or more.

New free health care proposal has attracted little attention

For a plan that will make healthcare free for 100,000 people and less affordable for many others, there’s been relatively little public engagement. Just six members of the public submitted comments, and journalists were the only members of the public at the two meetings OHA held in May.

And the agency has received only 41 public comments about the Basic Health Program since May 1. Thirty-five were in support, five were opposed, and one was neutral. Most were from organizations, not individuals.

Many safety net clinics and health care reform advocacy groups wrote in support of the plan, including OSPRIG, the Oregon Nurses’ Association, and the Oregon Primary Care Association. Two of the largest Oregon Health Plan providers, CareOregon and PacificSource, also support it.

“I have been impressed by how excellent my own and my child’s experiences were when we were covered by OHP,” wrote Silke Akerson, one of the individuals who commented in support. “I have been equally dismayed by how expensive insurance is on the marketplace for a product that covers so much less than OHP and has absurdly high deductibles. I have had so many more issues with healthcare access in the times I have had a higher income and no longer qualified for OHP.”

OHA has posted the slide deck for the presentation staff will give to the Oregon Health Policy Board on July 11. That presentation quotes only supporters of the BHP.

And while it does include a summary of the marketplace impacts, OHA’s slides do not mention that two major insurance providers, Cambia and Kaiser Permanente, submitted public comments asking the state to pause the launch, citing its destabilizing effect on the marketplace.

Health authority officials argue that not launching the Basic Health Program is also risky.

OHA staff estimate that the Basic Health Program will help about 20,000 people who would otherwise become uninsured now that pandemic-era Medicaid rules have expired. The agency expects an additional 11,000 people who are currently uninsured will sign up for the new plan.

Tens of thousands more will no longer have to pay monthly premiums or deductibles to access care.

Trilby De Jung is a Deputy Director of Health Policy and Analytics at the Oregon Health Authority. She says the costs have to be weighed against what happens if the state maintains the status quo.

“It came down to weighing who’s hurting the most in our state,” she said. “Who’s really bearing the brunt of losing insurance coverage as the public health emergency ends.”