Two Papers Examine Threat to Oregon's Health Exchange Posed by 'Adverse Selection'

OCPP has published two papers examining the threat that adverse selection poses to Oregon's health exchange.

Salem-News.com

(SILVERTON, Ore.) - Established by the 2011 Oregon legislature, the Oregon Health Insurance Exchange is a key part of the state's effort to create affordable, quality health coverage for all Oregonians. It's set to begin operating in 2014.

The laws that created the exchange, however, leave it exposed to a dynamic that has caused the demise of health insurance exchanges in other states: adverse selection. Adverse selection occurs when healthy and less healthy individuals separate into different insurance pools. Insurance pools saddled with a disproportionate share of less healthy individuals have difficulty competing with pools serving healthier individuals and risk eventual collapse.

OCPP has published two papers examining the threat that adverse selection poses to Oregon's health exchange and what the exchange's governing board and the legislature can do to minimize that risk.

The first paper, The Active Purchaser Imperative: Unless Oregon's health insurance exchange bargains for low prices, it risks collapsing due to effects of adverse selection, explores the risk posed by adverse selection. It explains that one of the best ways to avoid the harmful dynamic is for the exchange to negotiate for the lowest possible prices on health insurance plans on behalf of Oregonians.

The second paper, Inoculating Oregon's Health Exchange Against Adverse Selection, examines how the federal Affordable Care Act and the Oregon legislation that created the Oregon Health Insurance Exchange fall short of adequately protecting against adverse selection. The paper recommends additional steps policymakers can take to reduce the risk of adverse selection.

Source: Oregon Center for Public Policy

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