DCBS Media Release

September 25, 1996
For more information:
Ed Nieubuurt, 503-947-7985
Maxi McKibben, 503-947-7985

Health insurance reform: Key facts

Oregon Population: 3.1 million.

Insured citizens: 2.7 million. (87%)

• About 225,000 are covered through individual (non-group) policies.
• About 134,000 employees and dependents are covered in group plans offered by small employers (with 1-25 workers).
• 7% of the insured population was uninsured at some time in the last 12 months.

Uninsured citizens: 400,000. (13%)

• Average age: 26 (versus age 32 for insured persons).
• Average family income: $22,000 (versus $31,000 for insured families).
• 100,000 are uninsured for 1-3 months; 300,000 are uninsured for longer than 3 months.
• 90,000 are self-employed persons and their family members.
• Small firms (with 1-25 workers) employ about 350,000 people, but just 28% of those workers (98,000) get insurance through their work (the covered workers also enroll about 36,000 dependents).
• Workers in small firms who don't get coverage at work:
  • Statewide: 252,000
  • Portland area (tri-counties): 110,000
  • Lane County: 24,200
  • Marion County: 19,100
  • Jackson County: 12,200
  • Linn and Benton Counties: 12,100
  • Deschutes County: 8,600
  • Douglas County: 6,800

Employers who don't offer health insurance:

• Average size: 6 employees.
• Average salary: $15,200.

Employers who do offer health insurance:

• Average size: 40 employees.
• Average salary: $24,800.

Health insurance reform: Examples of reform impact

Workers who lose their group (i.e. employer-supported) coverage:
Federal and state COBRA laws allow temporary continuation of a worker's prior group coverage (6 months for firms with under 20 employees; 18 months for larger firms). Otherwise:

1. Pre-reform: A "conversion" policy – changing from group to individual coverage when COBRA benefits expire – with a $500 deductible would cost approx. $700/mo for an individual (age 40) and $1350/mo for a family.
2. With SB 152: The same coverage via a "portability" policy will cost approx. $185/mo for an individual and $430/mo for a family.

People who are denied individual coverage because of health problems:

1. Pre-reform: Coverage in the Oregon Medical Insurance Pool with a $500 deductible at age 40 would cost $165/mo.
2. With SB 152: Same coverage will cost $154/mo.

A 30-year-old woman wants to buy individual coverage:

1. Pre-reform: Some insurers would charge her 20% more than a man of the same age.
2. With SB 152: Gender differences are eliminated (rate for women is reduced 10%; rate for men is increased 10%).

A small business wants to provide coverage for its eight employees:

1. Pre-reform: An insurer would have several small business plans, but could refuse enrollment in all but the state designated "basic" plan if any employees are unhealthy. When a business enrolled, their rates reflected the age, gender, occupation, and health status of the employees, with a maximum variation among all enrolled groups of 100% – meaning that the highest rate could be no more than twice the lowest rate.
2. With SB 152: Insurers cannot refuse enrollment in any small business plan, and rates can vary only on the basis of age. The maximum rate variation among groups is still 100%, but actual variations, based only on age, should be much less.

How recent federal reforms (Kennedy-Kassebaum, HR 3103) affect the Oregon reforms

In general, HR 3103 establishes minimum standards in the following areas, but gives the states broad flexibility to maintain or develop reforms that exceed the minimums:

• Preexisting Conditions: Group plans can have a 12 month exclusion for conditions that were treated in the 6 months prior to enrollment, but the exclusion period must be reduced on a month-for-month basis for prior coverage that ended with 63 days of obtaining new coverage. The Oregon reforms allow only a 6 month exclusion period in group or individual plans, with credit for prior coverage that ended within 60 days.
• Small Employer Coverage: Employers with 2-50 employees must be accepted for coverage by any insurer that serves the small group market. No standards are established for premium rates. The Oregon reforms require guaranteed acceptance of employers with 2-25 employees and premium differences among employers are limited to differences in the age of enrolled employees. (The Oregon legislature will need to address employers of 26-50).
• Portability of group coverage: People losing group coverage must be accepted by any insurer that offers individual health plans if they had at least 18 months of group coverage and have exhausted their COBRA or state continuation rights; exclusions for preexisting conditions cannot apply; no standards are established for premium rates. The Oregon reforms apply to people losing group coverage after only 6 months, whether or not they have exhausted COBRA or state continuation rights; two coverage options must be offered by the same group carrier that provided the prior coverage; premiums must be pooled with the carrier's group plans, or a broad pool of individual plans; premium differences among participants are limited to differences in age.
• The federal standards apply to both insured and self-insured plans (state insurance laws apply only to insured plans).

Health insurance reform:
Summary of S.B. 152 components

(Effective on October 1, 1996)

1. Group Reforms – Applicable to all groups of two or more.
   
   • Carriers cannot use health statements to limit an offer of group coverage.
   • Carriers cannot refuse to cover or impose different coverage terms on a group member based on that person's health status. The same rule applies to associations within their trade or business.
   • Carriers cannot exclude preexisting conditions for more than six months, cannot treat pregnancy as a preexisting condition, and must give an offset against the six-month maximum for prior coverage (i.e., anyone covered for the last six months cannot be subject to a preexisting condition exclusion).
   • Carriers must provide portability coverage as described below.
2. Small Group Reforms – Additional reforms applicable to small employers with 2-25 employees.
   
   • Carriers must offer a state-approved basic health care plan to all small employers on a "guaranteed issue" basis (insurers cannot refuse to issue coverage). Carriers may offer additional plans of their choice as long as all plans are offered on a guaranteed issue basis.
   • Carriers can vary premiums only on the basis of geographical location, dependent enrollment, and the age of employees. Age variations must be uniformly applied and are limited within a 2:1 rate band (highest rates cannot exceed lowest rates by more than 2:1). A 3:1 rate band may be used between 10/1/96 and 10/1/99.
   • Carriers can offer different plans to different categories of employees as long as all employees are covered by qualified plans and the employee categories are not based on health status.
3. Portability Reforms – Applicable to all individuals who lose their group coverage after at least six months of coverage in Oregon.
   
   • Carriers must offer anyone leaving one of their group plans at least two portability plans (low cost and prevailing/average cost). Coverage must be offered on a guaranteed issue basis with no preexisting condition exclusion. Coverage is guaranteed renewable.
   • Carriers can vary premiums only on the basis of geographical location, dependent enrollment, and age. Age variations must be uniformly applied and are limited within a 2:1 rate band.
   • Individuals who cannot stay with their current insurer because they've moved out of the service area and individuals losing self-insured coverage can purchase portability coverage through the Oregon Medical Insurance Pool (OMIP) with no high-risk surcharge.
4. Individual Market Reforms – Applicable to all individuals.
   
   • Carriers must use a standardized health statement to determine acceptance or rejection of applicants.
   • For accepted applicants, carriers cannot impose exclusions or limitations other than a six-month preexisting conditions provision (with credit for prior coverage) or a combination waiting period/surcharge alternative for carriers who don't use a preexisting conditions limitation.
   • Carriers can vary premiums only on the basis of geographic location, dependent enrollment, and age. Age variations must be uniformly applied, but there is no rate band limit. Coverage is guaranteed renewable.
   • Rejected applicants can purchase coverage through OMIP with a 25 percent high-risk surcharge. Carriers can get an offset against their OMIP assessment if they accept and thereby mainstream individuals who might otherwise go to OMIP.