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Oregon's Health Insurance Marketplace Shows Signs Of Success

The Oregon Insurance Division will announce new prices for all the health plans available on Oregon’s exchange, Friday.

That’s important because it’s the first time insurance companies have set prices with the benefit of a year’s experience  — and with the knowledge of competitors’ prices.

Dr. Ralph Prows

Dr. Ralph Prows

Kristian Foden-Vencil/OPB

A couple of years ago, as health insurance companies prepared for the Affordable Care Act, Dr. Ralph Prows set up a new company — The Oregon Health Co-Op.

The idea was to start a company run by customers.

“The CEO and the staff and the company will forever and a day serve the needs of what the members think is the right thing. Instead of what a traditional insurance executive and their board or their actuaries or their lawyers think is the big idea,” Prows says.

Some people, like Portland scientist Graham Wright, signed up for the coverage.

“You know I’ve read various horror stories online of insurance companies going out of their way to try and trip people up on technicalities and find any excuse not to pay. So I just kind of  thought that perhaps a co-op might be less inclined to do that,” Wright says.

Wright wasn’t focused on cost when he signed up. But Prows now believes most of the co-op’s potential customers were, which is why the co-op didn’t attract many enrollees.

“We expect that by year’s end this year we’ll actually achieve 5,000 and we were hoping for more like 30,000,” Prows says.

In fact, when you look at the 11 companies that offered plans on Cover Oregon this year, the co-op only attracted 1 percent of enrollees.

Another insurer, Portland-based Moda Health, was the big winner there. It offered the lowest prices and attracted 73 percent of the enrollees.

Kaiser Permanente came second with 9 percent.

So, does that mean the new marketplace is working?

“I think enough people have signed up that it looks like the marketplace is going to be viable,” says Jesse O’Brien a health care advocate with the consumer group Oregon State Public Interest Research Group.

“And we have reason to believe that more people are going to sign-up next year. And we’re definitely seeing the impact of competition on the rates.”

But other health economists are more guarded when asked about the success of the new marketplace.

Peter Graven with Oregon Health And Science University says Moda’s 73 percent market share could be a problem.

“Generally that sort of market share is concerning for policy makers. Ordinarily that would give you some price-setting ability, like a monopoly. In this case, in Oregon, we have rate review and so rate review is going to protect consumers from some of that,” Graven says.

Jonathan Nicholas is a spokesman for Moda. He says the Oregon marketplace is very competitive,  with  many national, regional and local players. And, he says, Oregon healthcare consumers are very savvy.

A study by OSPIRG does suggest there’s market competition. It found that competition and the state’s rate review process cut $69 million from premium costs in Oregon last year.

But how about next year?

The Oregon Insurance Division will release prices Friday. But it’s already released proposed prices.

Moda for example is asking for a 12 percent increase.

On the other hand, other insurers like Oregon’s Health Co-Op, the Health Republic Insurance Company and Lifewise Health Plan all want to drop prices below what Moda is charging.

That’s good sign, says Graven. He says it’s also good news that most companies came back to sell policies on the exchange for a second year.

“You know, if they’d left the market, that’d be a sign that the marketplace was not functioning in an ideal way.”

Back at Oregon’s Health Co-Op, CEO Ralph Prows hopes that dropping prices — by as much as 31 percent for one product — will attract new customers. 

Call center worker at Cover Oregon.

Call center worker at Cover Oregon.

Courtesy Cover Oregon

“That drop puts us at the lower end, if not the lowest end of the market.  Very happy about that and I think that’s going to make up for what we didn’t enroll this past year.”

The state is still trying to transfer enrollment from Cover Oregon to the federal website.

Interestingly enough, the failure of Cover Oregon gives the insurance companies a second chance because everyone has to re-enroll starting in November.