On April 25 the Oregon Senate passed SB 99-A establishing a health insurance exchange with a 24-5 vote.

An exchange is essentially a new marketplace where individuals or small employers can shop for health insurance using simple, standardized cost and benefit comparisons between plans so that consumers can easily compare health insurance plans.   A large coalition of business groups support the approach that SB 99-A takes to develop of a health insurance exchange.  The bill has the potential to move Oregon toward our stated goals for the health care system, which address issues of cost, quality and access.

Federal law mandates that each state must design its own insurance exchange to be open for business by 2014. At least initially, these insurance exchanges will be open only to those who work for businesses with 50 or fewer employees as well as individuals looking to buy insurance for themselves. The exchanges are meant to be cooperatives that allow individuals and small businesses to band together for purposes of buying health insurance in order to enjoy the economies of scale and lower unit prices enjoyed by Oregon’s state’s largest companies. Companies with 50-100 employees will be able to participate in the exchange beginning in 2016.

Click here for a copy of the floor letter that several business groups presented Senators in support of the exchange before the crucial vote.

The bill now goes to the House of Representatives for consideration.

“The exchange will empower Oregonians, through better information, to make better decisions.” Said Senator Frank Morse (R-Albany), who carried the bill on the floor of the Senate.

Senator Laurie Monnes Anderson, a nurse and Democrat from East Multnomah County, noted that if Oregon doesn’t develop its own exchange, the federal government will create one for us that won’t take our state’s specific needs into account.

“The exchange is about choice, transparency and accountability,” said Monnes Anderson. “It will help consumers make direct apples to apples comparisons between different health plans.”

Senator Alan Bates (D-Ashland) noted that the transparency of benefits and costs that the exchange provides to consumers is a critical part of bringing down health care costs. Bates warned, however, that the exchange is not a panacea for improving quality and reducing costs. “The Exchange will eliminate most of the cost shift,” said Bates who, estimates that 10-15% of healthcare costs are due to the cost shift that occurs when uninsured people go to the Emergency room to access care.

“But it won’t change the way we deliver care. The high rates from insurance companies are a reflection of what is going on in health care-a lack of preventative care and primary care and overuse of specialized, high tech care.”