School Districts Urge Legislators to Allow Them to Leave OEBB

April 28, 2011—School district officials are dismayed that legislators in the Oregon House have refused to let them out of the Oregon Educators Benefit Board (OEBB), but remain hopeful legislation in the Senate side will prevail. 

 

“There's a little hope,” said Debbie Johnson, the Beaverton School District’s health resource coordinator.

 

OEBB, which was created in 2008, provides health insurance benefits to more than 150,000 school district employees, community colleges and education service districts and their dependents. When the bill was enacted, school districts had the ability to opt out, but had to prove that their insurance plans were less expensive than the state-run pool and also submit an actuarial analysis every two years.

 

Once a school district decided to participate in OEBB, they’ve been unable to leave. Three bills introduced this session -- House Bill 3478, House Bill 3244 and House Bill 3004 – would have extended them such a privilege if districts could show they could purchase a less expensive plan.

 

House Bill 3082 would also have removed the requirement for an actuarial analysis, which Johnson called a “wasteful expense.”

 

“Each year we’re saving millions of dollars,” she said. It’s a futile exercise,” to require Beaverton to provide an actuarial analysis. “OEBB will continue to increase rates each year. They would have to have negative returns in order to catch up with us.”

 

House Bill 3293 also died, and would have created a local government benefit board to administer health plans at the local level.

 

These bills didn’t survive, Johnson believes, because there’s a “fear factor” among legislators that rates would go up, and, in return, OEBB would lose some of its purchasing power. 

 

Committee co-chair Mitch Greenlick (D-Portland) refused to allow HB 3478 to move out of his committee last Wednesday. In return, House Republicans blocked seven health care bills, which subsequently died.

 

If health plans were administered on a district-by-district basis, school districts that remained in OEBB could be negatively impacted by higher costs, according to Rep. Ben Cannon (D-Portland). “What [one district] does will affect the districts that stay [in OEBB],” he said.

 

“If OEBB is doing such a good job and providing savings, why were their eight opt out bills from Democrats and Republicans this session?” asked Johnson, who, along with several other school districts, is trying to persuade the Senate to take action. 

 

Senate Bill 332 would exempt the Beaverton School District from doing an actuarial analysis every two years; Senate Bills 558 and 569, similar to HB 3478, allows districts to opt out if less expensive plans can be purchased.

 

District administrators, who testified, believe they should have the ability to choose their own health plans and, thereby, reduce costs. Continued double-digit rate increases and mixed results among school districts have renewed calls for greater exclusions.

 

Cathy Brown of the Oregon Trail School District said her district’s premiums have increased on average of 49.77 percent. If the district hadn’t participated in OEBB, she’s convinced they could have found saved money by finding a cheaper plan.

 

“The creation of OEBB took away competition and free enterprise,” she said.

 

“I’ve never before seen the drastic price increases we have suffered since the creation of OEBB,” said Nick Hogan, the finance director of the Hood River School District. “OEBB was created as an experiment, and it has failed.”

 

“Health insurance is a major cost factor,” to school districts, testified Rick Bennett, the lobbyist for the Oregon Confederation of School Administrators, and the Oregon Small School Association, both of which support the opt-out bills.

 

Since OEBB was created, the Beaverton School District’s plans have had rate increases as small as zero percent because its health plan is carefully tailored to meet the specific needs of its employees, Johnson said. “We’re saving money, and are being efficient.”