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THE DAILY ASTORIAN TUESDAY, MARCH 8, 2016
Oregon hospitals emerge as winners in Affordable Care Act
By JEFF MANNING
The Oregonian
PORTLAND — Oregon
health insurers hemorrhaged red
ink in 2015 as the industry con-
tinued to struggle in the Afford-
able Care Act era. The collec-
tive losses of the state’s seven
major insurers nearly quadru-
pled to more than 1 mil-
lion, with troubled Moda Health
Plans alone losing nearly $50
million in a high-pro¿le ¿nan-
cial implosion.
The state’s hospitals, mean-
while, are basking in an Afford-
able Care Act honeymoon of
soaring revenue and big pro¿ts.
The hospitals’ charity care has
plummeted since passage of the
act, which has led to a tripling of
their 2015 pro¿t margins com-
pared to 2013.
The hospitals’ bonanza
comes at the expense of taxpay-
ers, the insurance companies
and consumers who, in some
cases, face double-digit insur-
ance premium rate hikes.
“It’s the providers who have
won in the Affordable Care
Act,” said Jack Friedman, for-
mer chief executive of the Prov-
idence Health Plan. “They’ve
gotten a whole bunch of new
business and the charity care the
hospitals were providing is just
a fraction of what it once was.”
Painful achievement
Eighteen months since the
landmark Affordable Care Act
took effect, the legislation has
succeeded in its primary goal:
*etting 1. million formerly
uninsured Americans some sort
of insurance coverage. In
Oregon, more than half a
million people got cov-
erage through Medicaid
or commercial insurance
through the newly cre-
ated exchange.
Jack
Jesse Ellis
But that achievement
Friedman
O’Brien
has been painful, marked
by technological snafus,
partisan bitterness and ¿nancial promised ¿nancial assistance.
heartburn.
Numbers released this week
Taking control
by the Oregon Department of
Questions about Moda’s sur-
Consumer and Business Affairs vival swirled around the com-
show the steep toll Oregon pany for months until Oregon
insurers have paid as they strug- insurance regulators took the
gle to adjust to the changes.
company into supervision in
Surprisingly,
Providence January. In an order signed by
Health Plan, not Moda, posted both parties, Moda agreed to
the largest losses of the year make no signi¿cant move with-
among the big seven players. It out approval of a state of¿cial
lost $3 million in 2015, a dras- who would be based at the com-
tic reversal from the $22.3 mil- pany’s downtown of¿ce tower.
lion pro¿t it posted in 201. The state said it would begin the
Providence spokesman Gary process of helping Moda cus-
Walker attributed the big loss tomers move to different, stron-
to an inÀux of expensive new ger insurance companies.
customers and an ill-advised 1
Thirteen days later, the
percent rate cut it implemented Moda saga took another strange
in 2015.
twist when the state suddenly
“We’re all learning this as rescinded its order of super-
we go,” said Walker, who added vision. Oregon said it would
that Providence has an immense allow Moda to resume busi-
capital reserve, nearly 1,000 per- ness as usual and proceed with
cent beyond state requirements. its own plan to replenish its capi-
Moda last year lost $9.5 tal reserves with $170 million in
million, its second straight year new money.
of red ink. The travails of the
It appears Moda has already
second-largest carrier in the state come up with $3 million of that
have been well documented: Its new cash.
aggressive push into the indi-
In the ¿nancial statement it
vidual market created by the provided to the state last week,
Affordable Care Act proved to Moda disclosed that in Decem-
be a ¿nancial disaster, which ber it borrowed another $3 mil-
got even worse when the fed- lion from af¿liated companies.
eral government backtracked on This is in addition to the $50
million it borrowed from its par-
ent company in November and
still another $50 million it bor-
rowed from OHSU in Novem-
ber 201.
Moda of¿cials refused to
comment for this story, as did
Oregon Insurance Commis-
sioner Laura Cali.
Insurance woes
Regence BlueCross Blue-
shield was the lone company
among Oregon’s big seven
health carriers to post a pro¿t
in 2015. The Portland company
earned $25.8 million in the year
despite what company President
Angela Dowling called “chal-
lenging economic and regula-
tory shifts in our industry.”
Elsewhere, Paci¿cSource
lost $10.2 million, Lifewise lost
$35.7 million, Health Net Plan
lost $25.3 million and Kaiser
lost $13. million.
A wave of consolidation is
already underway in the health
insurance business and most
expect it to gather steam in the
face of similar ¿nancial strug-
gles industrywide. Health
Net is merging with St. Louis
based Centene Corp. Spring-
¿eld-based Paci¿cSource in
October entered into an alliance
with Legacy Health, one of the
state’s largest hospital
chains.
In the end, the insur-
ance companies most
likely to survive are
those like Kaiser and
Providence, which are
af¿liated with enormous
hospital systems.
“Consolidation is
happening now and I think there
will be further consolidation,”
said Friedman, the retired Provi-
dence executive. “It may be that
only three to four insurers have
the ¿nancial wherewithal and
the willingness to stay in this
market.”
Clare Krusing, spokesman
for America’s Health Insur-
ance Plans, a Washington, D.C.-
based trade group, said it’s
time for hospitals to offer con-
cessions on costs. “We need to
bring down the cost of care,” she
said. “We need to ¿gure out how
we can make care more afford-
able and more accessible.”
More change is coming
For their part, hospital execu-
tives argue that their good times
are unlikely to last. The federal
government will implement
changes to Medicare early in the
next decade that will hurt hos-
pitals’ bottom line, said Andy
Van Pelt, executive director of
the Oregon Association of Hos-
pital and Health Systems. And
even now, when urban hospi-
tals are enjoying big gains, some
smaller and more rural hospitals
continue to struggle.
“I don’t think the increases
you’re seeing now are sustain-
able in the future,” Van Pelt said.
Jesse Ellis O’Brien, who
watchdogs Oregon health insur-
ers for the Oregon State Public
Interest Research Group con-
sumer advocacy group, agrees
with the insurers. The changes
in charitable care alone have
generated huge ¿nancial bene-
¿ts for the hospitals that need to
be shared, he said.
Oregon’s 28 largest hospi-
tals provided $13.3 million
worth of charity care in the ¿rst
six months of 2015, according
to the Oregon Health Author-
ity. That’s down by nearly two-
thirds from the $1.7 million
worth of charity care the big
hospitals provided in the same
period of 2013.
As these former charity cases
became paying customers, Ore-
gon’s big hospitals, many of
them owned by non-pro¿ts, saw
their pro¿ts swell. The operating
margin at the state’s larger hos-
pitals hit 8 percent in the ¿rst
half of 2015, according to state
data, more than triple their prof-
its from 2013.
For champions of reform,
who repeatedly harped on the
importance of reducing health-
care costs, hospitals’ big pro¿ts
are not what they envisioned.
“The unspoken understand-
ing for a long time was that
hospitals were going to charge
more than they really needed
to in order to cover the cost of
charity care,” O’Brien said.
“Now, there are fewer and fewer
of those people. Does it really
make sense for hospitals to con-
tinue passing along charges for
costs that are no longer in the
system?”
Fluoride: Astoria has a colorful history with the additive
Continued from Page 1A
Last August, Astoria City
Councilor Zetty Nemlow-
ill suggested the City Coun-
cil discuss putting the issue on
the ballot. But the idea did not
surface again publicly until
City Councilor Drew Herzig
brought it up Monday night as
one of several possible ballot
questions for November.
The City Council has
already agreed to place a local
tax on recreational marijuana
before voters.
Time consuming,
divisive
Mayor Arline LaMear and
Councilors Cindy Price and
Russ Warr said the city is work-
ing through several signi¿-
cant issues and predicted that a
debate over Àuoride would be
time consuming and divisive.
“I just don’t think it’s the
time to bring it up,” LaMear
said. “There may come a time.
But I don’t think it’s this time.”
Herzig said November
would be the best time to put
the ballot questions up for a
vote because higher voter turn-
out is expected due to the pres-
idential election. In addition to
Àuoride, he Àoated issues such
as term limits and outdated city
charter provisions.
“I’m concerned that I’m
hearing that we don’t have time
to be a democracy,” Herzig
said. “That we’re just too busy
to ask the public — the citizens
— to vote on issues.
“Something as fundamental
as what you put into your body
on a daily basis, that you have
THE DAILY
ASTORIAN
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no choice over, unless we say
we can put a referendum on the
ballot saying whether you want
Àuoride.
“That bothers me that we
say we’re too busy to ask the
public if they want to have what
some people consider a poison
in the drinking water or not.”
Warr said he is “failing to
see a public outcry for some-
thing like that. And, we’re busy,
if the public isn’t asking for it,
why should we stir the pot?”
Nemlowill acknowledged
there is no public outcry over
Àuoride and said “if people do
want to vote on it, they’re going
to need to come forward and be
a little bit more vocal about it.”
Herzig proposed that city
staff draft a ballot question on
Àuoride in the water system,
but his motion failed on a 3-2
vote, with Herzig and Nem-
lowill voting for the motion
and LaMear, Price and Warr
against.
Colorful history
Ken Cook, the city’s pub-
lic works director, prepared a
memo on Astoria’s colorful his-
tory with Àuoride after the Port-
land vote.
2nce Àuoride was added
to the water supply in 1953,
Cook wrote, “citizens started
to revolt spreading false
rumors of broken water
mains, broken plumbing, pre-
mature unexplained deaths,
ships refusing to take on
water, chinchilla herds dying,
dwarfs ...the Red Machine
in¿ltrates the State Board of
Health to allow Stalin Soup
and Lenin Likker.”
Despite the vitriol, voters
approved Àuoride in 195 by a
wider margin than the original
1952 vote.
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