Bill May Bar Exchange from Negotiating Lower Costs

OSPIRG

Salem, OR – Consumer advocates and small business owners say that without changes, the bill to create an Oregon health insurance exchange may fail to deliver lower costs for Oregonians.

A centerpiece of the Oregon health reform package passed in 2009, a properly designed exchange would leverage the buying power of its enrollees – 350,000 individuals and employees of small businesses – to deliver lower prices and better choices.

“Small businesses need to be able to band together and negotiate with health insurance companies like large employers can,” said Rhonda Ealy, who owns Strictly Organic Coffee Company in Bend, Oregon. “My employees and I are counting on legislators to give us that right because we cannot go on quietly accepting that our rates will go up 17% or more a year for less coverage.”

Consumers and small businesses are alarmed that the bill under consideration in the Senate health subcommittee today (SB 99-3) does not require the exchange to negotiate for lower premiums for enrollees like large businesses currently do.

“This is unacceptable,” said Mary Jo Wevers, who owns Aquatic Biology Associates, Inc. “As a small business owner, our premiums have skyrocketed over the past 15 years, while our coverage continues to degrade. Just this week we received a letter from our health insurance company informing us our premium will increase another 20% this year. We need an exchange that will negotiate with insurance companies to get us a better deal. We simply to not have that power now.”

The bill will also allow industry representatives with conflicts of interest to serve on the board. The bill currently allows two seats on the exchange board to be filled by people with conflicts of interest, including insurance company representatives.

“They are allowing the foxes into the henhouse,” said Mark Gamba, who owns Mark Gamba Photography in Milwaukie. “The exchange is supposed to serve consumers and small businesses, not the insurance industry, but you would have a tough time guessing it by looking at the bill.”

The Senate subcommittee on Health Reform is scheduled to consider the bill today. On Friday, the House Health Care committee will begin developing its own version of an exchange bill.

“This is a critical moment for Oregon Legislators to stand up for small businesses and consumers,” said Laura Etherton of OSPIRG, “With rising insurance costs and a tough economy, we desperately need the exchange to drive a better bargain.”