As promised, here’s an update on the latest developments with health insurance rates for 2017 and what they mean for the future of healthcare in our state. Unfortunately, the news is not encouraging—premium rates will be going up steeply for many Oregonians—but there are some silver linings. Oregonians still have choices and can shop around for a better deal on a competitive market, and many will qualify for tax credits that will help offset the cost of rising rates.
At the end of the day, however, these rate hikes raise the stakes for addressing the root causes of rising health care costs, and we must redouble our efforts to address waste in the health care system, estimated to represent a third or more of every health care dollar.
To recap, earlier this year Oregon’s insurers proposed large premium increases for 2017 for individuals and families purchasing coverage on their own, ranging from 14.5% (Kaiser) to 32.3% (Moda). At the same time, some insurers were leaving the Oregon market altogether, and others announced that they would be scaling back their offerings in many parts of the state.
Thankfully, in Oregon the insurance companies don’t get the last word. Before they can raise premiums on individuals and small businesses, Oregon’s health insurers must get permission from state officials. For the last several years OSPIRG Foundation has watchdogged rate hikes, and our members and the public have joined us, submitting countless public comments on proposed rate increases. All this additional scrutiny has helped cut over $179 million in waste from premiums since 2010.
OSPIRG Foundation’s analysis of proposed 2017 premium rates raised some tough questions for insurers. Why are insurers asking consumers for more money when Oregon’s hospitals are increasingly profitable? Shouldn’t consumers expect to see savings when hospitals are doing well? Why aren’t insurers demonstrating progress toward containing costs by investing in prevention and improving their members’ health?
Our analysis also found that Oregon’s insurers have been losing money—in some cases, quite a lot of money—and some kind of rate increase is not unreasonable in that situation. However, we raised questions about some insurers’ projections of future costs, and we remain concerned that some of these increases may be excessive, and may overcharge consumers.
As we raised these questions, Oregonians from across the state also submitted thousands of public comments questioning the justification for the proposed rate hikes and calling on Oregon regulators to stand up for consumers.
In their initial decisions on the rate hike proposals, the Oregon Department of Consumer and Business Services took action to cut back some of the biggest rate hikes, citing OSPIRG Foundation’s analysis, among other factors. Although the approved rate hikes remained large, we estimated that their action would have cut over $23 million in waste and unjustified costs from premiums.
However, this was not the end of the story. Oregon’s Health CO-OP, a small but statewide health insurer, experienced a financial collapse shortly after the rate decisions were made, and was forced to go out of business. This left Oregonians in many parts of the state with few options for coverage and in some areas, just one company would have been available for Oregonians using the tax credits available through the marketplace on healthcare.gov. While regulators were able, working overtime, to take important steps to protect the CO-OP’s members in this unfortunate situation, we remained very concerned about the impact on consumer choice and competition.
To stave off what seemed like a growing crisis in health insurance availability, Oregon regulators took the highly unusual step of reconsidering the rates they had approved, and some insurers decided to expand back into underserved areas of the state in exchange for higher rates. This action prevented a scenario where large areas of the state might be left without a competitive insurance market—which could reduce competitive incentives to keep down costs, improve quality and provide good customer service—but at a high cost.
Oregon’s regulators are to be commended for working hard to avoid the worst possible outcome for 2017: large rate increases paired with a dramatic reduction in consumer choice and competition. Especially in a context where many states appear to be doing little or nothing to protect consumers from turmoil in health insurance markets, Oregon’s efforts have been impressive. But they’re not nearly enough.
The urgency of stronger action to address rising health care costs has never been clearer, and the idea that next year could repeat this year’s pattern is simply unacceptable. Not only are these rate increases unsustainable, it’s also critical to avoid setting a precedent that health insurance companies can get higher rates by threatening to withdraw their services from parts of Oregon.
In the coming year, we will be working with Oregon policymakers to push for meaningful action on health care costs. We know that progress will require building real transparency and accountability for the whole health care industry to keep costs reasonable and sustainable. Powerful interests will fight to preserve the status quo, but with your support and some hard work, we are optimistic that we can make progress.