...1. Health care reforms will cost a fortune. Section 9 of HB 2009-C instructs the governing board of the OHA in sub-paragraph (b.) to “develop and submit a plan to the Legislative Assembly by December 31, 2010, to provide and fund access to affordable, quality health care for all Oregonians by 2015.” It goes on to instruct the board in sub-paragraph (c.) to “develop a program to provide health insurance premium assistance to all low and moderate income individuals who are legal residents of Oregon.” (Underlining added for emphasis.)
Oregon has more than 500,000 uninsured legal residents. To “provide and fund” “quality” health care for them would cost between $2-4 billion per year, for starters. Factor in the costs of providing additional doctors, nurses, hospitals, etc. to give health care service to an additional ½ million patients, and you are talking about real money. In addition, sub-paragraph (c.) states OHA’s governing board is to “provide health insurance premium assistance to…moderate income individuals….” In past committees, supporters of HB 2009-C have expressed support for subsidized health care for those earning 300% or even 350% of the Federal Poverty Level (FPL).
To see the 2009 FPL chart, click here. From the FPL chart you can see that at 250% of the federal poverty level, a family with three children could be earning $64,475 and still qualify for taxpayer subsidized health care under HB 2009-C’s “moderate income” instruction. If moderate were defined as 300% FPL, that same family could be earning more than $77,000 and still qualify for taxpayer subsidies.
To me there is something wrong when those who qualify for subsidized benefits can be earning more than the taxpayers who pay for them. While I feel strongly that society has a duty to care for those who cannot care for themselves, we do a grave disservice to both the taxpayers and the recipients when the government assumes responsibility to provide health care or other benefits that individuals can and should provide for themselves. Besides, as the FPL goes up, so does the number of those eligible to receive the health care benefits. When the government provides health care, the costs do not go away, they merely get shifted for taxpayers to pay. To be successful, any health care reform must be financially sustainable, and it must be politically acceptable to 51% of the voters—because of the provisions of Section 9 (b.) and (c.), I believe HB 2009-C fails on both counts.
2. Creates the Oregon Health Czar. The Director of the Oregon Health Authority is given extensive powers to regulate the health insurance industry. In addition, Section 26 of HB 2009-C specifically exempts activities of insurers working under the direction of the OHA or DCBS from Oregon laws precluding conspiracies, monopolies, and price fixing. Such laws were implemented to protect citizens from abuse. That abuse can come from government agencies, just as it can come from corporate rogues. Exempting insurers from those safeguards merely because they are working under the OHA can have significant negative, unintended consequences.
3. Oregon Health Authority has a substantial conflict of interest. The OHA is a key regulator in Oregon’s health insurance industry. Section 10 (h.) of HB 2009-C states the following: “In consultation with the Director of the Department of Consumer and Business Services, [OHA shall] periodically review and recommend standards and methodologies to the Legislative Assembly for: (A) Review of administrative expenses of health insurers; (B) Approval of rates; and (C) Enforcement of rating rules adopted by the Department of Consumer and Business Services;” Then, in Section 10 (k.) it goes on to state: “[OHA shall] develop, in consultation with the Department of Consumer and Business Services and the Health Insurance Reform Advisory Committee, one or more products designed to provide more affordable options for the small group market.
Thus, OHA and DCBS will work together in reviewing rate approvals of private health insurers. Unless there are rules implemented to insulate OHA from access to private insurers’ data relating to administration, rating and profitability, a grossly unfair competitive advantage will exist. Not only will OHA purchase, administer and manage all Oregon health insurance plans for employees, prisoners and vulnerable citizens, OHA will also be developing and marketing its own policy or policies of health insurance benefits. This will place OHA in direct competition with the private sector insurance companies that it helps regulate.
4. OHA will force private insurers to either quit or become surrogates of the state. HB 2009-C gives the OHA tremendous power to control, intervene and regulate private health insurance companies. OHA can control private insurers’ rates, while OHA markets its own health plans in direct competition for market share. Such a “stacked deck” against private insurers will likely result in one of the two following scenarios.
(1.) The private insurers will be forced by either unfair competition or excessive regulation to abandon the Oregon health insurance market. The OHA health plans would then be the last game in town. In that event, Oregon will have government health insurance by default.
2.) The private insurers will adjust operations to financial realities, redesign health benefit plans, rates and underwriting to OHA’s dictated requirements. The private insurers will accept the profit margins OHA allows, and, essentially, become subservient to the state health care system. In that event Oregon will have government health insurance through its private insurer surrogates.
Either way, the free market for health care disappears, and state health care bureaucracy fills the void.
5. The federal government is likely to preempt state health care reforms. Notwithstanding the above arguments in favor or against HB 2009-C, on June 4, 2009, President Obama released the President’s own version of government health care reform, on a national level. The President calls for everyone to be insured, either with a policy of their own choice or government coverage. His plan would require the estimated 50 million Americans (including uninsured Oregonians), to receive health coverage. The price tag is about $1.5 Trillion, to start. Criticism of the President’s plan also applies to HB 2009-C. If the government creates its own plan and has the power to give it an artificially low price, it will effectively and quickly drive the private insurers out of the market. With competition gone, America and Oregon will have government run h ealth care whether the citizens wanted it or not.
In conclusion, HB 2009-C is not yet law. It will be debated in the House and Senate on June 8th or 9th. If it passes and is signed into law, it will cost the taxpayers $6.1 million over the next two years. When the Legislature reconvenes for the 2011 session, if the federal government has not preempted health care with a national health plan, the ground work will be laid for full implementation of the OHA. We all will be interested in seeing how much it will cost for the government to provide universal access to health care for all Oregonians by 2015. Even more interesting will be the discussion of how that cost will be paid. As mentioned above, I believe HB 2009-C will cost too much, will drive private insurers out of the market and will leave Oregonians with an unwanted, unsustainable and ill-conceived government run health care system. For these reasons, I voted against HB 2009-C in two Ways and Means comm ittees and I will vote against it on the Floor of the House. Since my position in the current session is often over-ridden by the majority, I expect HB 2009-C to be passed and become law. I have shared with you my opinions on the upside potential and downside risks of HB 2009-C. Time will tell whether my hopes for its potential or my concerns over its risks were correct.
Sincerely,
Dennis Richardson
State Representative
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