Oregon’s New Health Insurance Marketplace May Raise Costs for Shoppers
More than 100,000 Oregonians buy health insurance through the Affordable Care Act marketplace. For years, they have used the federal website to compare plans and enroll in coverage.
That process is changing. During the next open enrollment period, Oregon residents will use a new state-run marketplace instead of the federal system. The new website is designed specifically for people who live in Oregon and need individual health coverage.
A New State Marketplace
State health officials say the new system will give Oregon more control over enrollment information and make it easier to connect health insurance with other public programs. The state will also have more freedom to adjust the marketplace to fit local needs.
However, the new system comes with a higher fee for insurance companies. Oregon plans to charge insurers $35.60 per member each month for using the state marketplace.
The state has not provided a simple comparison between that fee and the costs insurers paid under the federal system. The old system included both a federal charge and a smaller state charge, and the federal fee was calculated in a complicated way.
Insurance companies provided a clearer estimate. They expect the new state marketplace to cost between $7 and $11 more per person each month than the previous system.
Higher Fees Could Reach Consumers
Insurance companies pay the marketplace fees, but those costs may not stay with the insurers. Companies often include added expenses in the prices they charge for health plans.
That means Oregon consumers could see at least some of the new cost through higher monthly premiums. The increase from the marketplace fee may be small compared with other price increases, but it comes at a difficult time for people already struggling to afford coverage.
For example, the typical monthly price for a silver-level plan bought by a 40-year-old from one large Oregon insurer is expected to rise from about $591 to $708. Many people will pay less after receiving government subsidies, but the full cost shows how quickly health insurance prices are rising.
Insurance Costs Are Rising Across the Country
Health insurance prices have been increasing in many parts of the country, including the Affordable Care Act marketplace. A recent health policy study found that premiums for benchmark marketplace plans rose by 42% over a two-year period.
Several forces are pushing prices higher:
- Extra federal financial help for insurance is ending.
- Medical care is becoming more expensive.
- Insurance companies are dealing with higher operating costs.
- New technology, including artificial intelligence, is adding expenses in some parts of health care.
- Some healthier people may decide to go without coverage when prices rise.
When healthier people leave the insurance market, the remaining group may have greater medical needs. That can make coverage more expensive for everyone who stays enrolled.
State Officials Point to Long-Term Benefits
Oregon health officials acknowledge that affordability is a major concern. They also say the new marketplace does not tell insurers exactly how to include the state fee in their administrative expenses. Each insurance company will decide how to handle the added cost.
The state expects the marketplace to cost about $93 million to launch and operate over five years. The program will be paid for through fees on insurance companies and money connected to other state programs.
Oregon expects the monthly fee to decrease after several years if enrollment stays level or grows. The reduction would happen after the state recovers one-time costs related to building and starting the new system.
Why Oregon Is Making the Change
State lawmakers approved the Oregon marketplace when health insurance costs were growing more slowly and enrollment in Affordable Care Act plans was increasing. The national program is now facing major changes, and federal support for the marketplace is less certain.
One Oregon insurance agent called the timing unfortunate. Still, the agent said the state needed to set a fee high enough to support a stable system and agreed that a state-run marketplace could offer important benefits.
Plans sold through the Affordable Care Act marketplace are especially useful for people who work for themselves and employees of small businesses that do not offer health insurance. These plans help people who do not qualify for job-based coverage or public insurance.
Oregon has fewer marketplace customers than some other states because many residents qualify for the Oregon Health Plan. That program provides broad benefits at no cost to eligible members.
The Cost Difference for Insurers
Insurance companies did pay fees under the federal marketplace. The federal government collected one charge, while Oregon collected a smaller amount. Even so, the combined cost was lower than Oregon’s new state fee.
One insurer estimates that its cost will rise by about $7.40 per member each month. Two other major insurers expect an increase closer to $11 per member each month.
That equals an added yearly cost of roughly $89 to $132 for each person covered through the Oregon marketplace.
One insurer explained that its previous monthly cost included a state charge of $6.85 plus a federal fee equal to 2.5% of the premium. Together, those charges came to about $24.72 per member each month. Comparing that amount with Oregon’s new $35.60 fee produces a difference of about $11.
The new marketplace may give Oregon greater control and make it easier to connect residents with public programs. But for people already facing steep insurance prices, the added fee could make coverage slightly more expensive.