Exclusive: Patrick Allen on Oregon’s alternatives to healthcare.gov
Patrick Allen, Director of the Department of Consumer and Business Services (DCBS), the agency that now oversees Oregon’s state exchange, reached out to State of Reform regarding comments we made on the department’s request for proposals (RFP) to develop a state-based platform.
Oregon currently uses the federal platform healthcare.gov. The 3 percent of premium charge to use this system and its limited flexibility has the agency looking for alternatives to present to state legislators.
DJ Wilson: Explain to us the thinking behind your Department’s RFP [request for proposals] for a state-based individual marketplace platform.
Patrick Allen: We’ve known, in addition to the charge on the federal platform, that we were going to need to proceed with some kind of SHOP platform. We’ve got an Oregon-specific wrinkle with that in that we have a rating methodology that the federal platform doesn’t accommodate. We’re getting close to the finish line with the Insurance Division in deciding if we were going to change that methodology. I’m pretty sure the answer to that question is “no”—the methodology won’t change. So we’ll need to make use of a platform to deliver SHOP, assuming that policy makers want to continue down that path.
When we were designing the RFP, first and foremost for SHOP, and we were looking at the federal platform, we got ourselves to the position of understanding since we didn’t know what the cost structure of the federal individual platform would be that it would be prudent to include in our RFP proposals on the individual marketplace for two reasons—one we knew we were likely to get better pricing on SHOP if we included the individual marketplace because we don’t think there are enough customers to support the cost of any platform for SHOP. This is a nationwide [issue] that has developed since the product rolled out.
We wanted to be able to provide policy makers a range of choices once we knew what the cost of the federal platform would be so that they would have the ability to compare whatever that deal was against [another option]. Now we know that the feds are going to charge 3 percent of premium. It’s a reasonably high number. Some states are aggressively arguing that it is an ‘absurdly high’ number. I’m not sure that I can quite get myself there. But it’s more or less equal to what we are currently charging for the actual program parts of running a marketplace.
So if we do nothing and simply using the federal platform, we’re either going to double the cost of our marketplace or have to significantly roll back all the things we do around outreach and plan management to be able to get to some total cost that is lower.
Before we could recommend any of that, what we really need is some idea of what are the options and the cost of those options available from the marketplace. That explains the RFP.
DW: Without prejudging who might respond, do you get a sense that other state-based exchanges will respond, or do you think that these will be private vendors that have helped build those state-based exchanges but have retained some intellectual property to extend it to Oregon?
PA: I think we will have a mix from truly off the shelf product to vendors running other state systems to other entities that are states or state corporations actually proposing. I think we will get some of each of these.
If it’s a state organization that proposes, that is actually an interesting opportunity because it’s a much simpler process to enter into an agreement like that.
DW: As an Intergovernmental Agreement?
PA: Right. Exactly; if state X says “we are happy for you to come onto our system, and we’ll run it and you pay us a fee”—something as straight forward as that, that’s an IGA between states, and the documentation part is pretty easy to do. The actual getting it done is still complicated.
DW: It will be interesting to see if there are any policy matters there about premium subsidies, supports, flowing to Oregon residents if they are purchasing through [say] a Washington state portal.
PA: You’d have to nail all that stuff down for sure.
DW: I’ve always thought that there’s an opportunity that Washington and Oregon can come together, if not for all the cultural baggage that plays out. I say this is as a former Oregonian from Bend, I could see the cultural reasons becoming a challenge. Has the Washington exchange reached out in any way to see if they can put together or offer a partnership?
PA: [no comment on WAHBE outreach] But back on your cultural point, I see what you’re saying. I think it’s easy in the Northwest to think about the differences between us, but good golly from a national perspective we are so much alike—our government cultures and our public cultures and the values of our citizens, even some of our geographic disparities within the two states. We’ve got so much more in common than we have different. I think that the cultural side would be huge advantage in trying to work something out.
The original model of fifty states all going off and create their own platform, is kind of nuts when you think about it. I think a much more functional model is a multi-state approach to these problems. I think we are all really starting to understand, you need those economies of scale to make this affordable.
That’s one advantage that I think Oregon has; per capita the number of enrollments is very strong. So we probably have more purchasing power for a state our size than others because we have excellent penetration. Our preliminary numbers this year are very encouraging.
DW: It would seem to me that one model that might be optimal is a regional, quasi-public entity with Oregon appointing board members, Washington appointing board members. That would take legislative changes in both states, and it would be a process. Do you have a sense in a hypothetical regional exchange model, would it be more palatable to have a quasi-independent with board governance from every member state or, for operational and accountability reasons, better to contract through an IGA model and have a purchasing state like Oregon hold the other state accountable for customer service of the state’s members?
PA: You hit it with accountability. There is huge value the legislature has put on our marketplace being part of state government with all of the accountability and oversight that goes with that, particularly with respect to budgets and my accountability as a state agency director to them and the Governor for all the work that I do.
In that context, it’s much easier to sell them on the model that whether it is the federal government or another state entity, or a private sector entity, they’re my vendor but I am accountable for assuring that my vendor performs. If my vendor is not performing, it is on me to fix that rather than have some complex entity that we have a portion of control over but not complete control over. I think that would be a step of removal that [legislators] would be quite uncomfortable with given where we sit today.
The main thing is that we’re not off to the races on doing a project. We are off to the races in getting the legislature and the Governor all the information they need to make a good decision about which direction to go. This might include a project, but in all likelihood probably doesn’t.
Once the RFP comes in with responses in January, we’ll have what I’ve describe as two tracks going forward. One—and it’s an optional track—is an implementation track. We score the proposals and pick a winner and enter into contract negotiations and spin up a project to move from the federal platform to a different platform.
The other track—which is mandatory and will happen sooner—is the policy track which is to be able to lay out for the Governor and the legislators a range of options and potentially some recommendations and get policy guidance on where they want us to go.
If we discover that they are all going to be about three percent then we can lay out the notion that there really aren’t any cost differences. The difference is really in flexibility and control.
DW: I recognize that you have to keep open the possibility of implementation because maybe something fantastic will come back, but probably any implementation would be difficult at best on that timeline?
PA: That’s why getting a good idea of what are the options and what are the tradeoffs [is important]. I was thinking to myself yesterday, doesn’t this all come down to cost and what are the chances that something will be cheap enough that we will do it? I think it comes down 80 percent to cost. Another 20 percent are the tradeoffs on control and decision making and flexibility.
I’ll give you a couple examples of those types of things. As you know, the feds extended the deadline for enrolling to get coverage effective January 1st—great decision I agree with it. They didn’t ask us; they didn’t tell us they were considering it. They didn’t even give us any advance notice. They just did it.
There have been other decisions along the way where that sort of thing has happened which have been more problematic. So you are certainly losing actual control of how the system works in your state by being on the federal platform.
On the flexibility side, there are a couple of things that we are considering doing that will be very difficult because we don’t operate our own platform. One of them is a desire to deal with the family glitch. If we controlled our own platform, it would be much easier to change qualifications standards because those are simply business rules. You have to do that in conjunction with money and a waiver, so it’s more than just the platform. Not having control of your platform means that you’ll have to do a work around.
An even better example of that, though it’s more in the weeds from a policy standpoint, the COFA Islander insurance coverage issue. COFA Islander is the Compact of Free Associations. They are residents of Palau, Micronesia, and [the Marshall Islands]. These are the places that [the United States] exploded hydrogen bombs in during the ‘50s. Due to that military relationship, they have a special status. They are allowed to immigrate to the United States, work here, live here, while being citizens of those island nations. However, in the Welfare Reform Act in ’96, they were stripped of ability to participate in any assistance programs, including Medicaid.
So if they’re here legally, but they are poor, they can’t get access to healthcare. In the legislature there is interest in creating a premium assistance program that will provide to them Medicaid-like benefits. I think this is something that is going on in other states as well, but our legislature has taken bipartisan interest. There will be a bill in February that will create that program. We’ll have to come up with some sort of system to make that work because that’s not something that we’ve got the ability to build into our marketplace even though the marketplace is where the legislators are going to assign responsibility.
Those kinds of tradeoffs and control issues will have a real value to legislators. That’s going to be the really interesting conversation from a policy stand point. How much do you value those? How does that fit into the actual cost differences in the platform? At the end of the day, how does that roll up into what [legislators] want us to do in terms of a project?
These [opportunities] factor into the once burned-twice warned notion of having gone through this with CoverOregon. Is there really an appetite to do it again? That appetite, I absolutely understand, is pretty slim.