Oregon Senate nears vote on insurance exchange

SALEM, Ore. (AP) — After years of work to create an insurance exchange aimed at lowering health care costs for individuals and small businesses, the state Senate is finally preparing to vote on a carefully negotiated bill this week.

But the compromise, which passed a Senate committee unanimously with support from the insurance industry, has left consumer advocates disappointed. The bill would prohibit the exchange from negotiating for lower rates and would allow health industry executives to serve on the governing board.

"I think consumers and small businesses, who have been paying the prices for years and years, deserve better," said Laura Etherton, a lobbyist for Oregon State Public Interest Research Group. The compromise is also opposed by unions, AARP, the Oregon Nurses Association and other groups.

Despite the criticism, the bill has powerful supporters who praise it as a revolutionary leap for people who have trouble getting access to affordable health care. It's aimed at small businesses that struggle to afford health insurance premiums for their workers and at people who are self-employed and can't get access to coverage from an employer. Without the buying power that large employers have, small businesses and individuals face hefty premiums that are rapidly rising.

"This legislation will give more than 350,000 Oregonians access to quality, affordable health care and give Oregon small businesses the ability to provide coverage for their workers," Gov. John Kitzhaber said after a state Senate committee approved the measure earlier this month.

The full Senate is scheduled to vote on Monday, and supporters and opponents both say they expect SB 99 to pass and move on to the House, where lawmakers could attempt to change it to address critics' concerns.

The bill would essentially create an online shopping center for health insurance where people could compare plans and see whether they qualify for subsidies under the federal health care law signed last year by President Barack Obama. A nine-member governing board would set standards for health plans, including minimum benefits and minimum satisfaction ratings from consumers, doctors and hospitals.

"I think the exchange is good policy. I think it will be a great asset for consumers," said Sen. Frank Morse, R-Albany, who supported the measure in the Senate health committee. "It just is not going to be a vehicle to reduce costs. It'll be a great facilitator and service."

Consumer groups are disappointed with a provision that would prohibit the exchange from negotiating with insurance companies to provide lower rates. But proponents say there will be plenty of competition to provide low rates because companies will compete to win the business of insurance buyers shopping through the exchange.

"I don't see the role of the exchange as one of negotiating," said Sen. Alan Bates, D-Ashland, a physician who supported the bill on the health committee. "It should be one setting up a very transparent system so small businesses and individuals can buy into a group market in a way that's transparent."

The exchange's governing board would be appointed by the governor and subject to Senate confirmation. Two of the board members can be employed by health industry employees — another bone of contention between consumer advocates who say it creates a conflict of interest and proponents of the bill who say specialized expertise is critical to the success of the enterprise.

The exchange would begin offering health insurance to individuals and businesses with fewer than 50 employees on Jan. 1, 2014. Two years later, businesses with up to 100 employees would become eligible.

The bill is an outgrowth of a 2009 state law that required the Oregon Health Policy Board to develop a plan for creating an insurance exchange. Obama's health care law also requires an exchange in each state. If Oregon doesn't create one, the federal government will step in with its own. Proponents of a state-crafted exchange say local patients would be much better served by an approach tailored to Oregon's specific needs.

Other states, including Maryland, New Jersey and California have created exchanges or taken major steps toward doing so.

Providence Health and Services, an insurance company and health provider, called the measure "one important step in simplifying the purchase of health insurance and improving access to health care services."

"It strengthens Oregon's competitive health insurance market and allows all carriers who meet the standards to participate in the health plan exchange," the company said in a statement.

Oregon has been awarded a $48 million grant from the federal government to pay for an exchange's computer infrastructure. Experts say a useful exchange requires complex programming that can accurately calculate an individual's cost and determine whether they qualify for federal tax credits. It needs to link with insurance companies, the state's Medicaid program and the Internal Revenue Service, which is charged with tracking whether patients have signed up for mandatory health coverage under the federal health care overhaul.

Supporters hope Oregon's computer work could be a model that would be easily replicated in other states.