Double-Digit Rate Increase Hits Oregon Schools
At the same time, teachers will see their benefits reduced, paying higher copays and deductibles.
Providence Health Plans and The ODS Companies have the steepest increases – 28.5 percent and 18.2 percent respectively, while Kaiser is the lowest cost alternative, with a 9.8 percent hike.
None of those rate hikes reflect previous losses by the health plans during the first year of the contract, according to Joan Kapowich, administrator of the Oregon Educators Benefit Board. An earlier article in The Lund Report showed that ODS had suffered losses of $38 million.
Steve Carlson, the actuary from Towers Watson, has independently verified these new rates, Kapowich said, and they include the administrative rates agreed by the contract and the funds to cover anticipated claims costs.
Besides higher rates for health insurance, teachers will see a reduction in their benefits, paying higher copayments and deductibles.
“It’s fair to say these increases will impact rates on employees during these tough economic times,” said Brett Yancey, who chairs the OEBB board and is director of budget and financial planning for Springfield Public Schools. Had those changes not been made, insurance premiums would have increased by another 4 to 8 percent, he acknowledged.
Nevertheless, critics challenge whether the creation of such a large insurance pool is actually doing what legislators intended -- reducing insurance costs and returning those savings to the classroom.
“Where are the huge savings that were advertised when this went into effect?” asked Michael Berry, a principal at Mercer Health and Benefits LLC, whose firm is a consultant for Chemeketa Community College, which doesn’t participate in OEBB.
“There’s more to this game than putting people in one large pool,” he added. “A lot of big savings numbers were thrown around back then. I don’t think the pool has proven to save money any more than any strongly managed benefit program.”
Beaverton School District refuses to participate in OEBB, believing its costs are too high. The district can document $4 million in savings, while its insurance rates once again remain in the single digits, Debbie Johnson, health resource coordinator, told the board.
“Where are the savings that Senate Bill 426 (which created OEBB in 2007) were supposed to bring back to the classroom?” she asked. “We can do it for far less and have been a credible group and successful in managing our own pool of people.”
But at least one district has managed to save money -- Bend-LaPine Schools, said Ron Gallinat, who runs Central Oregon Employee Benefits LLC in Bend and is vice-chairman of OEBB’s board.
During the first year (October 2008-September 2009), his district saved $1.7 million by reducing administrative costs and changing the benefit structure for its 1,500 employees. Of that revenue, $1.3 million represented savings for employees; $400,000 for the school district. Before joining OEBB, the district had coverage through PacificSource Health Plans and Clear One Health Plan.
Throughout the state, OEBB has been able to reduce costs through administrative savings, Kapowich acknowledged.
Currently, ODS has the largest chunk of the school districts and community colleges, with 102,357 employees and dependents, followed by Kaiser, 23,668 and Providence, 14,145.
Because of its lower cost, more employees may choose the Kaiser option during open enrollment. “They’re not at the behest of the provider community like ODS and Providence,” Berry said.
“If there’s one positive out of this, OEBB is doing some things to encourage better behavior,” he added. “How it’ll be accepted within this group who’ve been used to extremely rich benefits remains to be seen. I wasn’t surprised by the huge rate increases because teachers are high utilizers of healthcare.”
An analysis of claims by Towers Watson backs up Berry’s assertion. It showed that 92 percent of OEBB members submitted claims during the first year, compared to the norm of 81 percent.
Obesity was a major driving factor of claims costs, followed by joint replacement, lower back pain, asthma, sleep apnea testing, cardiovascular disease and diabetes. There was also a high incidence of cancer and high use of radiology services for musculoskeletal diagnoses. Meanwhile there was an under-use of screening tests for breast and colon cancer given the age/sex of the OEBB population.
To keep costs under control, OEBB intends to initiate a coaching program for weight management, require precertification for expensive radiology services, and encourage people to use the genetic equivalent for Lipitor to reduce their cholesterol. There will also be a focus on treatment choices for cardio-vascular disease, benign uterine conditions, lower back pain, breast cancer, prostate disease and joint replacements, according to report submitted by Towers Watson.
Learn More
For related articles on OEBB click here.
To review the new OEBB medical rates, click here.
For a comparison of OEBB medical plans, click here.
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Comments
Lots has been said about Regence. Interesting that Beaverton Schools, a Regence account, is doing well while PEBB and OEBB (OEBB's OSBA and PEBB both formerly Regence accounts) struggle. How could so many Board members, staff and consultants have gotten things so wrong?
Recently I've read a lot about short term health insurance coverage for students and how affordable it is depending on the state. It appears that the cost of insurance has been raised in Oregon in hopes of increasing the amount of money rolled back into education.
As part of this educational approach to health care, I do think that the initiative to educate on preventative measures, starting with the importance of healthy eating and exercise, is a good move. The healthier people are may mean a decrease in the cost of premiums as a whole. Ultimately, it will be interesting to see if the extra funds will be rolled back into schools as was initially thought.
Reminds me of a marketing experience I had with one of Portland's school districts pitching our health plan. The annual individual deductible was incredulously low, like $50 where the general market was at least $150. It was all she wrote when I had the audacity to suggest that they could consider increasing that deductible as one measure to mitigate costs. Sparked a conversation among some board members about cutting the football program as a means of returning serve to the taxpayer. When the health care benefits of a Portland School teacher falls in the order of $1200 per month, when is the discussion going go after that with resoluteness, putting aside at least temporarily who takes the hit? A large part of why the problem is so hopeless is because so few are willing to personalize the obligation to seek the highest value. When did comparative value become so culturally offensive?
The benefit changes that OEBB has approved for 2010 make a lot of sense. Hopefully, most people, whether covered under OEBB or not, will see that the benefits are still top notch. Incenting people to address certain chronic condtion drivers is a good thing...although I argue that relatively minor differences in cost to the consumer probably won't change behavior much (i.e. if you have high BP and haven't been taking care of it by going to the doctor and/or taking medication (not to mention changing your lifestyle!), then a differnce in $4 or $5 copay is very unlikely to make you suddenly START taking care of yourself!).
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