When President Obama and Congressional Democrats caved last year and passed a health reform bill without a public option, the best hope left for reining in runaway healthcare costs fell to state-run insurance exchanges.

The Oregon Health Authority last year began gathering input on how best to run an exchange program, as required of all states by 2014 under federal health-insurance reform. But like doctors removing the wrong limb, a key Legislative committee botched key portions of the bill that would have best protected individuals, families and small businesses—making the Senate Subcommittee on Health Care Reform this week's Rogue.

Affordable-care advocates say the three members of the subcommittee—Frank Morse (R-Albany), Alan Bates (D-Medford) and Laurie Monnes Anderson (D-Gresham)—failed consumers by compromising on the bill in two key ways. First, the bill allows insurance-industry representatives to sit on the board. Even worse, it bars the exchange from negotiating for prices. As the bill stands, the exchange is required to accept an equal number of plans from each insurer-—taking away the leverage that would have come from being able to pick and choose plans to best serve consumers.

Laura Etherton, a lobbyist for the Oregon State Public Interest Research Group, says the committee gradually yielded to the powerful insurance lobby despite OSPIRG and other groups' efforts to salvage the bill's effectiveness. In a public hearing April 14, Monnes Anderson praised the consumer advocates' amendments but said a deal with Republicans had already been struck.

Monnes Anderson defends the result.

"We wanted to get that plan going," she says. "I'm not saying it's a good end result, but it's definitely a good start."

Etherton disagrees.

"It's just unfortunate that they had to compromise the heart out of it," Etherton says. "To be barred from actually negotiating lower costs is outrageous."

The Senate passed the bill April 25 by a vote of 24-5.