by Sen. Doug Whitsett
I wrote a column in June detailing the ongoing issues with national health care reform under the 2010 Patient Protection and Affordable Care Act (ACA), commonly known as Obamacare. More developments have emerged since then, causing even more severe problems for rural Oregonians and consumers across the United States, as well as the Obama administration’s credibility.
Oregon insurance regulators announced their plans last week to take the first steps to place the state’s Health Co-op into receivership. This July 8 article in the Oregonian states the company’s board has voted to agree to the receivership order. This agreement would enable the state to liquidate the Co-op’s assets.
The Oregon Co-op had expected $5 million in funding from the Centers for Medicare and Medicaid Services to help bolster its bottom line. Instead, federal officials informed the Co-op it owes $900,000 to the agency. This nearly $6 million shift in its expected balance sheet is on top of the $18.4 million that the Co-op lost last year.
The decision to liquidate will affect the Co-op’s nearly 12,000 customers in the individual market, who help comprise the roughly 20,600 total policyholders who had purchased plans through the Co-op.
In response, the director of Oregon’s Department of Consumer and Business Services (DCBS) has sent this e-mail to all of the state House and Senate members advising them on how to assist constituents who have been adversely affected by the Co-op’s liquidation.
The Co-op has become the third Oregon insurance company to experience financial crisis in the past several months. Health insurance giant Moda was placed under supervision by state regulators in January. That order was later rescinded after the company sold assets to restore its depleted capital. Prior to that, Health Republic announced its decision to pull its health plans from Oregon’s market.
Health Republic filed a $5 billion lawsuit against the federal government in late February. Moda filed a similar lawsuit in early June. Previous lawsuits regarding ACA have not gone well for the Obama administration.
My office was contacted in late May by an insurance agent in La Pine who was concerned that major health care providers were discontinuing service in the area, leaving consumers with a dwindling number of options. In response, I met in my Senate office with the insurance commissioner and the DCBS director to bring their attention to these problems.
We were told during that meeting Deschutes County would have three providers of individual health insurance plans. In fact, we were assured that all Oregon counties would continue to have multiple insurance providers.
The same insurance agent recently contacted us again, expressing his concern regarding the impacts that the loss of the Co-op will have on local consumers. We held yet another meeting in my capitol office earlier this week with the agent, Rep. Gail Whitsett, the insurance commissioner and the DCBS director.
Gail and I were in Salem for a meeting of the Department of Energy Oversight Committee. The agent traveled all the way from La Pine for the meeting to ensure that the directors understood the issues.
Both directors informed us that they had not expected insurers to abandoning specific counties and regions as they have done. It seems they expected providers to either serve the state or leave it entirely.
The La Pine insurance agent told us the prices at one particular hospital in Central Oregon are 30 percent higher than those at other comparable Oregon facilities. Similar problems appear to be emerging in Lane County.
We were told that neither the Insurance Commission nor DCBS have any control over hospital prices. Fair hospital prices are a function of the Oregon Health Authority, although pricing of hospital services was apparently not addressed by the ACA. As a result, some health systems are creating regional monopolies that serve to shield them from any competition or scrutiny over those charges.
Moreover, we were informed that hospitals are actively enrolling people in insurance policies when they come to the hospital without coverage and needing services. Insurers simply are unable to cover their risk exposure because they must either insure these people or leave the insurance market in the area.
All of this mirrors a trend that is occurring nationally. This July 12 article states that only one-third of the co-ops created under Obamacare are still operating following the closure of those in Oregon and Connecticut.
The negative effects of ACA are accumulating and are focused on the individual policy holders. They are now causing the most angst in the Bend-La Pine and Eugene areas. However, we can also expect them to cause similar harm to all of the people in rural Oregon in the near future.
We were assured by the Commissioner and Director that there will be legislative concepts introduced for the 2017 session to try and resolve some of these problems. However, I remain skeptical that the average Oregonian will ever be well-served by the ACA or any of the administrative actions that it has prompted.
The ACA is not faring better on the national scene. According to this July 5 article in the New York Times, a federal appeals court recently ruled that consumers must be allowed to purchase insurance policies the Obama administration had previously determined did not meet the standards set forth in the ACA. The court ruled the administration went beyond the terms of the federal law when issuing a rule barring the selling of those insurance policies as separate stand-alone policies.
At issue were policies in which insurance companies pay consumers a fixed dollar amount, regardless of how much is owed to the health care provider. These insurance products are known as “fixed indemnity” policies. They were designed to offer coverage that is less comprehensive and less expensive than the “minimum essential coverage” required under the ACA.
Lawyers representing the plaintiffs in the case expressed several concerns. They were particularly upset about what the administration’s rule meant for people who make too much money to qualify for Medicaid, but not enough to qualify for subsidies in the public marketplace and who were unable to afford major coverage on their own.
The now-overturned rule was issued by the administration in 2014. It stated that such policies could only be sold to people who already have comprehensive coverage. As many as four million people throughout the U.S. may have these policies, which have been exempted from federal standards since 1996. The administration justified its rule by claiming that allowing people to buy those policies would undermine the ACA goal of maximizing the number of people with overall insurance coverage.
However, the appeals court found that Congress never gave “even the slightest indication” that it meant to exempt those policies. The ruling upheld a lower court’s decision where the judge stated that the rule adopted by the administration “has no basis in the statutory text it purports to interpret and plainly exceeds the scope of the statute.”
“Disagreeing with Congress’s expressly codified policy choices isn’t a luxury administrative agencies enjoy,” the ruling states. The federal court’s ruling went on to criticize what it characterized as “administrative overreach” by the U.S. Department of Health and Human Services in attempting to implement the rule.
The stated intention of the ACA was to provide greater access to affordable private insurance for individuals and businesses throughout the United States. It is proving to be a failure of epic proportions.
Conversely, if the true intention of ACA was to set up the private insurance market for collapse in order to enact a single payer system, it is working exactly as planned.
The attempts to reform health care through big government, executive fiat and mandates on individuals and businesses has resulted in soaring costs, the loss of coverage for millions of Americans and the creation of monopolies that are now nearly “too big to fail.” In my opinion, it’s a prime example of government regulation causing a problem and then perpetuating the problem to make it worse. Once the problem becomes unbearable, the public is told the only answer is higher taxes and more government intervention to solve the problems that were created and grown as a result of government actions.
Many of us believed from the beginning the ACA was on the wrong track. We felt the way to address uninsured populations was through free market mechanisms that empowered consumers by giving them more choices over their health care providers. Those concerns were generally minimized or dismissed outright as Oregon’s political leaders embraced the federal government takeover of our medical insurance system. We are now experiencing the consequences of that misguided effort.
Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls