Testimony of Janet Bauer, Policy Analyst, Oregon Center for Public Policy, House Committee on Health Care, December 8, 2014

Chair Greenlick, Vice Chairs Keny-Guyer and Thompson and members of the committee, my name is Janet Bauer. I am a policy analyst with the Oregon Center for Public Policy.

I appreciate the opportunity to comment on the Oregon Basic Health Program Study commissioned by the Oregon Health Authority and conducted by Wakely Consulting and the Urban Institute. I thank the Oregon Health Authority for allowing public input into the contracting process and study details.

The study shows that Oregon can design a Basic Health Program with lots of winners. We can create a Basic Health Program that increases health coverage, lowers health costs for tens of thousands of low-income working families and builds on Oregon’s Coordinated Care Organization (CCO) structure.

Here’s the kicker: we can do this at little to no cost to the state, making Basic Health a win-win proposition several times over.

The OHA-commissioned Basic Health study shows that when the state’s current health reforms are fully implemented, 17 percent of low-income individuals eligible for marketplace coverage will remain uninsured. These uninsured will be working Oregonians who do not receive coverage through their job. These Oregonians will be unable to comply with the mandate to have health insurance because, despite generous subsidies, marketplace coverage will still be too expensive given their modest income.

Working Oregonians without health insurance risk poorer health. The state as a whole suffers due to lower productivity and avoidable health system costs.

The study shows that Basic Health is a viable solution.

Under federal law, states that choose to adopt a Basic Health Program have flexibility in how they structure it.

The study shows that if Oregon were to create a Basic Health Program using its Medicaid (CCO) structure, the uninsured rate among the eligible group would drop from 17 percent to below 6 percent. Some 10,000 low-income working Oregonians would gain health insurance.

Further, about 56,000 low-income Oregonians currently in commercial coverage instead served by Basic Health would benefit from sharply reduced health insurance costs. The study shows that their average costs, which are estimated at $1,600 annually, could shrink or disappear under a Basic Health Program. These families likely live paycheck-to-paycheck, so these cost-savings would meaningfully improve their economic security.

By capitalizing on Oregon’s CCO structure, Basic Health would provide a more comprehensive benefit package as compared to typical marketplace coverage. For instance, few individuals currently in marketplace plans have adult dental coverage, a situation that will not change under HealthCare.gov. Fortunately, these individuals would gain adult dental coverage under a Basic Health Program operated as part of the Oregon Health Plan CCO structure.

Employing Oregon’s CCO structure would reduce administrative costs for commercial insurers and the state. The study found that the rate at which individuals move between types of coverage due to changes in eligibility — a phenomenon called “churn” — would decline with CCO-based Basic Health, reducing the costs of dis-enrolling and enrolling individuals.

The study also shows that Oregon can implement a Basic Health Program at little or no cost to the state. Federal dollars that would otherwise go toward marketplace subsidies for the eligible group would pay for the bulk of the program. Those funds, and smart choices in program design as suggested by the study authors, could mean a program that fully pencils out.

Though not modeled by the study, the state could design Basic Health in such a way as to improve CCO provider reimbursements and thereby strengthen CCO networks.

Oregon will need further analysis of these and other policy options not modeled in detail in the current study to design the right program for Oregon.

It is clear that Basic Health is a win-win proposition. At little to no cost to the state, Oregon can improve the health coverage and economic security of tens of thousands of vulnerable working families, while building on our health care transformation efforts.

Thank you for this opportunity to comment on the Oregon Basic Health Program Study.