Public Employees’ Benefit Board Plans For Big Budget Hole

The board reached consensus on implementing a $35 spouse or domestic partner surcharge, increasing the out-of-pocket maximum for members from $1,000 to $1,500, and instituting higher co-pays for certain high-cost procedures that have limited effectiveness.

 

Another potential source of long-term savings is what the board calls the “Health Engagement Model,” a form of health plan that requires high-risk members to improve their health through an individualized ‘action plan’ or end up paying more for their medical benefits.

 

The model would probably end up costing more in the long run, according to board vice-chair Rocky King, but could save PEBB money over time as its members proactively address their health issues and keep everyone’s healthcare costs down.

 

The large range for potential PEBB deficits allows wiggle room for changes in funds that may come about through the collective bargaining process. It also represents the range between three different scenarios modeled by the board’s consulting firm, Mercer: a 5 percent increase in funds for employee healthcare costs; the current funding level; and Governor John Kitzhaber’s proposal to unions, a return to the 2010 funding level.

 

The deficit in the 5 percent increase scenario would be $20.5 million; the status quo scenario would put PEBB $56.7 million in the hole; and the back-to-2010 option would create a $104.5 million dollar funding gap.

 

“These are big bad numbers no matter how you look at them,” said Joan Kapowich, PEBB’s administrator.

 

The consensus changes will easily close the smallest gap, but making up the $56.7 million deficit involved difficult decisions by the board. Members grudgingly agreed to adopt surcharges and increased charges for tobacco and certain specialty medications, respectively, as well as to devise strategies to get members to choose PEBB’s lower-cost plans.

 

The board does not yet know how much these changes would actually save. PEBB staff will come back to the board with concrete figures at its April 4 meeting.

 

Kitzhaber’s proposal, also known by board members as the “worst-case scenario,” stumped the board.

 

"It's not possible to get there," said board member Diane Lovell of the American Federation of State, County and Municipal Employees Council 75. "We don't have enough things on the list” of potential cuts created by the board. “This is wholesale slaughter."

 

Prior coverage of PEBB in The Lund Report here.