At the end of the 2011 and 2012 legislative sessions, headlines crowed about the progress Oregon had made on health care transformation as a result of bipartisan legislation from both sessions. In fact, Oregon has become a national leader on the topic with leadership from Oregon's governor, Dr. John Kitzhaber. From the establishment of Coordinated Care Organizations (CCOs) to the establishment of one of the first exchanges nationwide, Oregon took major steps forward in implementing health care reform.
As CCOs have begun to spring up in different communities throughout the state and details of the health insurance exchange have become more clear, a surprise that legislators didn’t anticipate is beginning to bubble-up to the surface: Major increases in health care costs will hit consumers just as the exchange debuts early next year.
Many of the causes of these cost increases are outside the control of Oregon legislators, but they nonetheless have the potential to unravel public support for reform as front-line consumers come face-to-face with the true cost of health care for the first time.
Many legislators may have thought their work on health care reform was complete, but their oversight work on implementation may have just begun to ensure the transition to a reform reality doesn’t become a consumer nightmare.
Based on work done by the regional office of America's Health Insurance Plans (AHIP) and reported last week to the Senate Health Care Committee, here are the reasons why premiums are going up:
* A major factor is that "underlying medical costs are rising" at much faster rates than overall inflation.
* Rising costs of pharmaceuticals is another factor.
* Federal and state budget constraints have resulted in an underfunding of Medicare and Medicaid obligations. As a result, doctors, hospitals and other practitioners charge more to the insurance-buying public — sometimes as much as 20-30 percent more. This is what is referred to as the “cost shift.” It has a real impact on consumer rates.