PEBB Expected to Increase Rates

July 7, 2010 -- Now that the $34 million hole has been plugged for state employee benefits for 2011, the Public Employees Benefit Board is preparing to accept rate increases to cover that gap when it meets on Friday afternoon.

 

Medical costs will take the biggest bite, increasing by a proposed 9.93 percent, on average, while dental and vision benefits remain stable.

 

Earlier, Governor Kulongoski only authorized a 5 percent hike. To come up with the difference, the board decided to liquidate a reserve fund created by Standard Insurance that guaranteed $20,000 in death benefits to state employees. They will, however, retain a $5,000 benefit.

 

Providence Health Plans, which administers the self-insured program statewide, will realize a 12.7 percent increase in premiums– bringing the employee benefit to $982.07 per month. The cost for an employee and spouse will be $1,315.84 next year. These increases are based on medical trend based on utilization and medical inflation. Providence's administrative expenses will not increase,.

 

Mercer, which consults on behalf of the board, asked both Providence and Kaiser how a Weight Watchers program for family members and domestic partners over age 18 would rates in 2011. That decision will be made at Friday's board meeting.

 

The rates for Kaiser, meanwhile, will increase by 7 percent, with the employee cost reaching $893.90, while an employee and spouse will cost $1,197.83. Kaiser’s rate proposal is based on a 7.5 percent combined medical/pharmaceutical trend assumption.

 

Mercer also did an independent review that suggested a 6.9 percent increase, including increasing the dependent eligibility to age 26 following passage of federal health reform.

 

ODS dental benefits are expected to increase 0.6 percent with state employees required to pick up 50 percent of the cost for a crown benefit, while Kaiser’s dental rates should increase by 1.5 percent, and Willamette Dental”s rates remain stable.

 

ODS has the highest number of state employees and dependents – 95,608 – while Willamette Dental has 17,766 members and Kaiser, 15,914.

 

Vision benefits should be reduced by 16.9 percent because of a proposed 23.9 percent decrease in administrative fees at VSP.