Proposed rate changes | “Politics over proficiency” | State-based exchange in 2016?

We touch on a couple of big questions this month, which will take longer than 30 days to sort themselves out.  But, rest assured you’ll be hearing about them again at our Sept 24th conference!  We should have everything figured out by then…


DJ 5 things updated

1. “Politics over proficiency”

The presentation prepared by Oracle for the House Energy and Commerce Committee, which was uncovered by KATU recently, is a tremendous political broadside against Governor Kitzhaber.  It claimed the Cover Oregon website was ready to go in February but was not launched for political reasons.  Oracle said releasing the Cover Oregon website for open enrollment didn’t fit with Kitzhaber’s “re-election strategy of blaming Oracle for his own mistakes.”

My guess is most folks don’t think Oracle is entirely unbiased here.  But, the more interesting question is this:  does this represent the start of a sustained political activism against Kitzhaber by Oracle heading directly into the fall election?  Spending $10m on the campaign could be cheaper than paying back Cover Oregon in a lawsuit.

2. Some CCOs paid performance incentives, but not all

The state released its quarterly report of data on CCOs progress this week.  The compelling data continue:  ER utilization is down 17% while primary care utilization is up 11%.  The allocation of dollars is moving in the same direction: more to primary care and less to ERs.

What seemed most interesting was the report on performance incentive payments.  Many CCOs did well:  11 of the 16 were paid out more than they contributed to the pool.  One was paid at 100% of what they paid in.  Four took a hit, with Jackson Care Connect earning back only 74% of what it paid into the incentive pool.

Garvey Schubert Barer Law

3. Will Cover Oregon be state-based in 2016?

We hear lots of folks wonder aloud at why so much of the Cover Oregon infrastructure is staying in place.  Sure, there are layoffs coming.  And, it’s moving to a federal hybrid model for 2015.

But, if a federal model were the future, why hire a new Executive Director?  Why keep the tax and fee revenue in place?  Why spend $650,000 in bonuses for employee retention?  I’d bet this is something you’ll see Diane Lund and Nick Budnick digging into even more.

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4. Price inelasticity of demand and drug pricing

Price inelasticity of demand is the economist’s term for wanting something so much you’ll pay almost any price – like a miracle drug that will save your life.  It used to be that “miracle drug” was more of a marketing term than a real term.  But with genome-specific drugs, like those coming from OHSU, these drugs hold real promise for health improvement.

Which is why the work the HERC is doing related to Sovaldi is such a delicate issue.  Should a life saving drug be covered by Medicaid if it means that it eats up the budget for all other drugs for all other beneficiaries?

Logo: Family Care

5) A review of proposed insurance rate changes

We were reviewing Oregon health plan filings for the 2015 Exchange – because we’re health care geeks – and were struck by how volatile the pricing looks to be in 2015. Sure, the last open enrollment was tough.  And the state grandfathering plans was for insurers who had priced a risk product based, in part, on old plans going away.

But the range of proposed rate changes is still very wide:  from a 28% increase to a 21% decrease.  With inflation pegged at about 2.2% (a guess we derived from Oregon CPI in 2013 and Q1 2014), that put a total of 14 filings with an average plan proposed rate increase above inflation.  A total of 13 filings were proposed with rate changes at or below inflation.