ACA Implementation—Monitoring and Tracking Oregon Site Visit Report March 2012 Teresa A. Coughlin, The Urban Institute Sabrina Corlette, Georgetown University TABLE OF CONTENTS Executive Summary .......................................3 Medicaid Policy ........................................... 15 Background ....................................................5 Budget Pressures and Medicaid ............... 15 Health Insurance Exchange: The ACA and Medicaid .............................. 16 Planning and Implementation......................7 Medicaid Managed Care ........................... 17 Policy Issues: Decisions Made and Sources of Controversy .........................8 Provider and Insurance Markets .............. 18 Health Insurance Exchange: Enrollment Hospitals ................................................... 18 and Subsidy Determinations .......................9 Primary Care Capacity .............................. 19 Insurance Reforms ..................................... 11 Insurance Industry Competition Implementation and Impacts of and Response to Reform........................... 20 the ACA’s Early Market Reforms ............... 11 Oregon’s Business Planning for the Insurance Community and the ACA ........................... 20 Reforms of 2014 ........................................ 13 Conclusions ................................................. 21 Focus on Affordability: Medical Loss Ratio and Rate Review ..................... 13 Notes ............................................................ 22 EXECUTIVE SUMMARY Oregon has made significant strides toward plan competition and help make products more implementing the Affordable Care Act (ACA). It was affordable. For the latter, industry stakeholders are on one of the first states to pass legislation establishing a Oregon’s exchange but their participation was limited health insurance exchange as required under the ACA. to two voting members out of nine total members. Oregon has also passed other legislation to prepare for health insurance reforms in the ACA. As an Early Exchange officials have many critical issues ahead Innovator grantee, Oregon also has made substantial of them, including a plan for public education and progress in ensuring that its information technology consumer assistance, designing strategies to protect systems are ready to determine eligibility for Medicaid against adverse selection, the role of agents and or tax credits. While not yet a top priority in its reform brokers, whether to establish a Basic Health Program, efforts, Oregon is also well positioned to implement and whether to use the federal risk adjustment the Medicaid expansion, in part because of the state’s program or run its own. In addition, to encourage long track record in expanding program eligibility small business participation, exchange officials are to higher income individuals and to populations not considering a defined contribution model with broad generally covered, such as childless adults. Oregon’s employee choice of plans. successes so far in implementing the ACA can be attributed to already having passed many elements of Health Insurance Exchange: Enrollment and the law as part of its own health reform efforts, having Subsidy Determinations – Oregon is well on its way a strong commitment from top policymakers, including to having its information technology system ready to the governor, and making the ACA compatible with process applications for both prospective Medicaid Oregon values. and exchange participants come October 2013. Oregon’s plan for its system is to move away from the Health Insurance Exchange: Planning and state’s current siloed system, with separate systems Implementation – Oregon was one of the first states for every program that do not “communicate” with to enact legislation to establish a health insurance each other, to a “seamless” eligibility and enrollment exchange under the ACA. Passed during the 2011 system and processes. A vendor contract was signed legislative session, the exchange garnered support in June 2011. The plan is for a single web-based from legislators across the political spectrum. interface that will determine in real time for most Oregon’s exchange law created an independent individuals their eligibility for tax credits within the public corporation, with authority to establish rules exchange or their eligibility for Medicaid. Eventually, and raise revenue through assessments on health eligibility and enrollment for social services will be insurance carriers. While passing with bipartisan done through the same system. In large part, progress support, the legislative debate was not without has been rapid because several years ago Oregon’s controversy. Two main issues surfaced: One centered Department of Human Services (DHS) had begun a around whether the exchange would act as an department-wide technology modernization effort for “active purchaser,” and the second concerned the all of its human services eligibility systems. inclusion of health insurance companies, providers or insurance brokers on the exchange’s board of Exchange officials are fully aware that public directors. As to the former, while the language education, marketing, and assistance to individuals of the statute does not convey authority to the and businesses will be essential to the exchange’s exchange to negotiate directly with plans, state success. They intend to learn from and build upon leaders believe there are several options to enhance the state’s successful efforts to enroll children in ACA Implementation in Oregon—Monitoring and Tracking 3 Healthy Kids, Oregon’s publicly subsidized program medical, dental and behavioral health services. for children in low- and moderate-income families Replacing current Medicaid managed care plans, launched in 2009. CCOs will receive a fixed global payment and be held accountable for certain quality outcomes and metrics. Insurance Reforms – Passed with little controversy, The hope is that if CCOs can streamline and improve Oregon enacted legislation that provides the state the efficiency of the health care system, primary care with clear authority to enforce the ACA consumer will be sufficient to meet the increased demand likely protections that went into effect on September 23, to occur under reform. 2010. In addition, on balance, the state has had few problems with insurance carriers relating to the Oregon is exploring the possibility of establishing the ACA’s early reforms. Perhaps the most unique state Basic Health Program (BHP). The state is well aware action relative to the ACA’s early market reforms is the that BHP makes insurance more affordable for enrollees creation of a “reinsurance pool” to stabilize the child- and would help reduce individuals from churning on only insurance market and ensure that commercial and off Medicaid. At the same time, though, the state carriers continue to offer new policies to children is concerned about the affordability of BHP and how it under 19. The pool was created in response to several might affect the viability of the exchange. commercial carriers threatening to stop issuing child- Provider and Insurance Markets – Oregon’s only policies. Another early reform in the ACA, the health care market is organized largely by geographic temporary high-risk pool, has had low enrollment, in regions and populated primarily by locally owned and part because since 1989 Oregon has operated its own operated providers, not large national corporations. high-risk pool. Indeed, because Oregon’s health care market is Oregon expects it will need additional legislation to organized at the local levels and providers and health bring the state into compliance with the insurance plans are largely “homegrown,” the state is optimistic reforms scheduled to go into effect in 2014. State that CCOs, which push responsibility for health care regulators intend to commission some actuarial to the local level, will work and generate considerable savings. Oregon’s commercial insurance market is modeling of the impact of the 2014 reforms in order relatively competitive compared to many other states. to gauge the impact on premiums in the individual Most of the carriers are “domestic”; large national and small group market. Oregon is concerned that carriers have not gained much of a foothold in the the ACA’s requirement to expand the small group state. Oregon’s competitive insurance market has market from 50 to 100 employees could cause some placed carriers at a disadvantage relative to providers, larger employers to self-insure and escape key federal many of which are hospital-based systems that reforms and state regulation. carriers must include in their networks in order to Medicaid Policy – Oregon is projected to experience remain competitive. nearly a 50 percent increase in Medicaid enrollment Health care providers and insurance firms were with the ACA Medicaid expansion, though some generally supportive of Oregon’s health care efforts. of the new enrollees will be transitioned from the While each group liked and disliked different elements Oregon Health Plan Standard, a long-running of the reforms, the state appears to have successfully component of the state’s Medicaid 1115 waiver in made the case to stakeholders that it cannot continue which enrollees receive a reduced benefits package. to finance the current health care system without The state is worried whether there will be sufficient changes. Though not universal, Oregon’s business primary care capacity to meet the new demand,