Oregon considers bringing State Exchange under DCBS

Everyone remembers the CoverOregon disaster, the IT debacle which cost the state $248 million, moved 2015 enrollments to the federal system, and unleashed the Oracle, Inc. legal nightmare. But Oregon is not ready to throw in the towel just yet. A draft Bill proposes that remaining exchange functions stay under state control with CoverOregon giving the “warm hand off” to the Department of Consumer and Business Services.

House and Senate members gathered Dec. 10 at the Joint Interim Committee on Health Insurance Transition to weigh the pros and cons of the restructuring, which would take effect sometime before the third open enrollment in October 2015. Sentiments ran the gamut from optimistic to wary.

Patrick Allen, Director of Department of Consumer and Business Services (DCBS), a state agency which handles the majority of Oregon’s consumer protection and business regulatory activities, argued that Oregon must maintain its status as a state-based exchange from a policy standpoint.

“Were you to be of the mind to consider ‘let’s just send the whole thing to the feds’… you would lose the ability to make a lot of policy decisions about Qualified Health Plans here at the local level, and you would have some risk with the tax credits,” said Allen. “And it would cost more. The federal assessment rates that get folded into insurance rates are higher than the rates set in Oregon. That kind of an option is paying more to get less.”

The Executive Director of CoverOregon reminded legislators that while the state currently uses HealthCare.gov, it is still classified as a state-based exchange supported by federal technology.

What marketplace identity Oregon will carve out moving forward is the question on deck. Control of the individual and small group health insurance markets is what is at stake.

“It turns out we couldn’t exactly do it the Oregon way,” said Rep. Mitch Greenlick (D-33), “So how can we transition from what we have now to a new version of a state-based market and bring it in-house in a way that makes some sense?”

A State Based Market by Any Other Name
Much discussion surrounded the exact functions of a state-based marketplace and what work DCBS would stand to “inherit” if it took over Cover Oregon operations.
Patnode defined roles of the state-based marketplace versus what lives in the federally facilitated marketplace (FFM). A state-based marketplace must be a non-profit entity established by the state which engages in independent external audits and perform the following duties:

  • Eligibility determinations and enrollment (now moved entirely to HealthCare.gov)
  • Plan management– all activity in carrier operations, contracts, and support, determination and regulation of QHPs
  • Call center– for consumer issues with accounts and eligibility. (Patnode reports that
    CoverOregon currently shares this responsibility with the federal system but cannot see into the eligibility system and therefore cannot assist customers directly).
  • Operations-general consumer issues being addressed in the proper way.
  • Small business health options plan (SHOP)
  • Public education and outreach

Oregon still has control of review of QHPs for Oregon specific requirements and community partners and in-person assisters, according to Patnode. Payments for broker work related to the exchange in 2014 are still being paid out by CoverOregon and the arrangement with carriers and brokers would not be passed on to DCBS.

The “Coming Storm” of 2014 Tax Credits Could Sour the Handoff
Another issue that legislators raised was CoverOregon’s remaining responsibility to handle 2014 premium tax credits.

“[The 1095] is a new tax form. It will be very confusing to consumers. Every state will be challenged with this as they go through the process of trying to educate consumers on how to file this information,” said Patnode.

Patnode reported that CoverOregon anticipates a larger number of Oregonians having to file for tax extensions, pushing the tax season further in 2015 than anyone has expected. As it is the responsibility of the state marketplace to distribute and educate consumers on tax filing for exchange shopping that happened in 2014, handing off to DCBS before that date could spell disaster.

“I think we’re going to enter into a certain kind of storm here,” said Sen. Alan Bates (D-3). “What happens when that 1095 form goes out? I think we have to be extremely careful as a state about giving advice to people on how to fill these forms out because that opens up certain liabilities.”

Bates suggested that the committee keep the tax season in mind and put off the DCBS transition until July of 2015.

“The list of nervous people includes me about this,” said Allen when asked by Rep. Nancy Nathanson (D-13) about accountability in enforcing intergovernmental contracts. Earlier, in the meeting he stated that DCBS taking over means a single point of accountability to place blame if anything goes wrong.

“I just hope it doesn’t get to that point. I just hope that we are developing a structure and using a process where you have the tools that you need to keep it from getting to where we need to exercise that,” said Rep. Nathanson.

The committee will meet again in January 2015 where it will open the topic up to public comment. Watch the Interim Committee Meeting discussing LC1203.