You can now add the budget to a long list of problems facing Oregon’s health exchange program.
It’s really quite simple. Higher costs, lower revenue, and a smaller reserve fund. That all could equal higher costs for consumers.
Up until next year federal dollars will foot the bill for Cover Oregon to operate. However when those dollars stop, the program will have to stand on it’s own. And if the music stopped now, Cover Oregon would be without a chair to sit on.
Oregon Congressmen Earl Blumenauer was on KGW’s Straight Talk and addressed Oregon’s troubled health exchange program among many other topics.
Beset with setbacks, including an online enrollment system that still doesn’t work, Cover Oregon has dialed back its enrollment projections and significantly increased spending on technology.
Once the federal money dries up, Cover Oregon will get most of its funding from a fee added to each enrollee’s monthly premium. With fewer people now expected to enroll and pay the fee, Cover Oregon would need to collect more from each individual to break even. The agency’s board is scheduled to set the fee in March.
The agency also could get more money from the state, either by asking the Legislature for general fund dollars or increasing the fee it charges the state Medicaid agency for enrolling people in the Oregon Health Plan.
Cover Oregon also could ask the federal government to extend the grant funding to make up for a shortfall.
“We have no indication that they’ll extend beyond the 2014 date, but that’s something they’ve not closed the door on either,” Triz delaRosa, Cover Oregon’s chief operating officer, said last week at a public budget meeting.
Without a working online enrollment system, Cover Oregon has been forced to use paper applications and process them by hand – a cumbersome process that’s expected to limit the pool of applicants. The state insurance commissioner is also allowing insurers to extend plans that had been slated for cancellation, and Cover Oregon has delayed the rollout of its small business option.
As a result, Cover Oregon’s budget experts are now predicting a smaller pool of applicants with a higher average age. They lowered their most pessimistic enrollment projections for 2014 by 18 percent to 105,500.
The agency will earn an average of $9.38 per member per month next year, all of which will go to a reserve fund to help cover future shortfalls or pay for large expenses such as technology upgrades. Officials now project that they’ll only be able to save up enough cash for 3.9 months of expenses.
To break even in 2015, officials estimate the fee would have to rise to somewhere between $15.50 and $21.67, depending on how many people are expected to enroll at the time the rate is established. To mitigate the cost increase, the exchange could cut costs, tap the reserve or seek outside funding from the state or federal governments.
Meanwhile, software glitches have contributed to higher-than-expected spending on technology. For the quarter ending Sept. 30, Cover Oregon’s information technology costs were $25 million over budget. Officials say they’ll make up for it by spending less in 2014.
State lawmakers voted to create an insurance exchange after Cover Oregon Executive Director Rocky King, who went on medical leave last week, pledged that it would break even in 2015.
“If we see we’re not at a break-even point,” King told state lawmakers last month, “the Legislature and the governor will have a decision to make. Do you put funds in, or do you ask the federal government to take it over?”
The Associated Press contributed to this article.