Five years ago when Oregon tried to launch its own website where consumers could purchase health coverage and get government help paying for it, the site failed miserably. Instead of using the botched, $300 million Cover Oregon website, the state relied on technology from the federal health insurance exchange, HealthCare.gov, to confirm eligibility and enroll members in health plans.
But with rising fees to use the federal site and limited flexibility, state health officials are now mulling whether it might be time to relaunch the state’s own health care insurance exchange.
“The question is whether there is some alternative that would actually be cheaper, or at least competitive in price, that might also give Oregon flexibility,” said Jesse O’Brien, policy director for the Oregon State Public Interest Research Group and a member of the exchange’s Marketplace Advisory Committee.
“Having no control over the system, it’s already clear over the past few years that it’s not the optimal situation.”
Nationwide, 34 states use HealthCare.gov as their exchange, while 11 states and the District of Columbia operate state-based exchanges. Oregon and four other states have state-based marketplaces but use the HealthCare.gov software platform on their sites. The Centers for Medicare & Medicaid Services allowed those states to use the software for free in the first two open enrollment sessions but started charging a fee of 1.5 percent of premiums for the 2017 open enrollment period. CMS then raised the fees to 2 percent for 2018 and will charge states 3 percent for 2019.
Because fees are charged as a percentage of premiums sold through the site, and premiums are rising year over year, the amounts paid by the insurance plans and ultimately by consumers are growing even faster.
Oregon exchange officials said health plans paid an estimated $16 million in fees for the 2018 open enrollment period, and expect to pay somewhere between $25 million and $30 million for 2019.
Those price hikes have spurred discussion among staff and advisory committee members whether the state is still getting its money’s worth in using the federal exchange, or whether acquiring its own technology might be cheaper.
“I think the state needs to keep asking that question,” O’Brien said. “Maybe we look into it and decide there’s not enough reason to switch. I’m agnostic about that, but I think they need to keep asking that question.”
Oregon exchange officials have also been frustrated by the lack of control the state faces when using the federal platform. Last year the Centers for Medicare & Medicaid Services decided to shorten the open enrollment period for HealthCare.gov over the objections of many states. States that ran their own exchanges were able to extend their enrollment windows and increased the number of consumers who signed up for insurance. But Oregon was stuck with the shorter window.
“It’s complicated because there’s a lot of potential benefit (for consumers) if you do your homework and you do the whole process thoroughly,” said Chiqui Flowers, administrator of Oregon’s health insurance exchange. “I think being able to extend that past Dec. 15 and buying consumers more time is always beneficial for those trying to get insurance.”
Oregon and the four other states who use the federal technology to power their exchanges have started negotiating as a group with CMS, pushing for more flexibility and for more access to data on enrollees. The states were able to secure a list of who enrolled during the open enrollment period, but do not have real-time access to enrollment data.
“We used that list last year to provide a warmer outreach and education campaign, especially since (HealthCare.gov) cut their advertising budget by 90 percent,” Flowers said.
“But it’s a static list, and it’s a lot different when you have access to see when a consumer enters the system, or to be able to see (their data) when the consumer calls us and asks us for help.”
With better access to enrollment data, the state could determine who is also eligible for other programs, such as food stamp or welfare programs, and to better coordinate benefits across different state agencies.
“There will always be limitations on that because HealthCare.gov is a monster machine, and it is difficult to parse out and select data just specific to a certain state or to create any type of flexibility in that giant architecture,” said Heather Korbulic, executive director of Nevada’s health insurance exchange. “We’ve been successful in getting some data, but it’s never real time, and the likelihood of having real-time data is very small.”
That’s hampered outreach and enrollment efforts. Instead of being able to target messaging, she said, Nevada had to use its advertising and outreach dollars to blanket the entire state.
Nevada’s experience with creating its own marketplace was similar to that of Oregon’s. The state had contracted with Xerox to build their exchange software from scratch. While Nevada was able to process applications, the site was fraught with problems and state officials turned to the federal platform instead.
“When CMS determined that they were eventually going to charge the 3 percent, we looked down the barrel and said, ‘That’s not going to work for us, there’s no way we can be solvent,’” Korbulic said.
CMS officials did not respond to a request for an explanation of the price hikes. Agency staff said the fees are similar to what states using the federal exchange pay for the same services.
States relying completely on the federal exchange are charged 3.5 percent, just a half percentage point more than states like Nevada and Oregon that do much of the work of operating an exchange, but rely on the federal software.
“It really says to me, the value of what we’re doing with our plan certification and our marketing and outreach, CMS only sees that as worth 0.5 percent, and that’s clearly not the case,” she said.
Nevada made the decision this year to explore other sources of software and to move to a state-based exchange. Nevada is now seeking to purchase exchange software from another state or its vendor, in time for the 2020 open enrollment period.
The state expected to pay CMS about $12 million for its software platform in 2020, but after talking to software vendors, believes it could acquire its own technology for about $6.5 million. Nevada is only willing to consider software that has been used successfully in other states.
“We live with the ghost of Xerox,” Korbulic said. “There is absolutely no way we want to see any kind of repeat.”
A learning experience
It remains to be see whether Oregon has sufficiently recovered from its exchange debacle to follow Nevada’s example.
“I can speak for myself; it makes me very cautious,” Flowers said. “I have been part of the exchange from the very first moment, so I was part of the team that experienced all of the website difficulties.”
But Flowers said the state could learn from that experience in the next go around.
“We need to be wary, but whether or not it clouds the conversation or stops the conversation, I don’t know because that conversation has not yet started,” she said. “Will this work for Oregon? I don’t know yet.”
O’Brien said there is definitely hesitation in moving toward a state-based exchange because of the initial fiasco with the Cover Oregon website.
“I think that’s totally reasonable,” he said. “We did have a bad experience, and when we moved to the federal system, it worked much better. It’s fair to say that we should learn something from that.”
But as long as the state is paying for the federal platform, the cost and feasibility of state-based exchange is going to remain on the table, he said. “There’s always going to be a cost-benefit analysis we need to be doing.”
There are other benefits to running a state-based exchange besides costs. One analysis found that premiums for 2018 averaged 21 percent higher on the federal exchange than on state exchanges. While most of the states using the federal exchange had between 1 and 4 insurers drop out from 2017 to 2018, more than half of state-based exchanges lost no insurers.
If Nevada is successful in relaunching its fully state-based exchange, other states, including Oregon, could soon follow.
“All eyes are on Nevada right now,” Korbulic said.
— Reporter: 541-633-2162, firstname.lastname@example.org