Dems Backtrack On Health Care Savings Under Pressure From Public Employees

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Two years ago, Oregon Gov. Kate Brown signed into law a major health care cost reduction package that was championed by Democratic leaders in the House and Senate.

Now lawmakers are trying to reverse some of those savings before they even take effect later this year despite facing a remaining Medicaid shortfall of about $520 million

The reversal follows fierce pushback by teachers, public employee unions and rural school district administrators. 

Senate Bill 1067, proposed in the final month of the 2017 Legislative session and passed in its last few days, eliminated double coverage for public employees enrolled in health plans through the Public Employees’ Benefit Board or the Oregon Educators Benefit Board.  When two adults in the same household are both enrolled through the boards, they can use one policy to cover health care expenses and have the other one to pick up costs like copays. Employees who opt out of health coverage receive a taxable monthly payment of $233, and yet they can still retain coverage through their spouse or partner’s plan.

Board plans cover nearly 300,000 employees and their dependents.

Lawmakers touted an estimated $178 million in savings between 2019 and 2021 as a result of SB 1067 -- a figure state health officials and budget analysts have since revised down to between $149 million and $163 million. Most of those savings come from a new cap of 200 percent of Medicare starting this year on hospital reimbursement rates under the board plans.

But eliminating double coverage and opt-out benefits would save the state about $10 million this biennium, the boards’ Director Ali Hassoun told members of the House Committee on Health Care this week. Roughly $3.1 million would come from eliminating double-coverage, while $6.5 million would be saved by cutting opt-out rights for plans under the Public Employees’ Benefit Board. Hassoun said his agency doesn’t have opt-out cost savings data for plans under the Oregon Educators Benefit Board.

Those benefits are immensely popular with eligible employees: Nearly 1,500 employees take advantage of double coverage, and about 900 policyholders in the Public Employees’ Benefit Board opt out of coverage, Hassoun said. Eliminating those benefits could raise premiums for those workers an estimated 1 to 2 percent.

When one of Michelle Johnson’s two sons spent a week in the hospital last summer, double coverage provided through the St. Helens middle school teacher and her ex-husband’s policies enabled them to meet their deductible and save thousands of dollars, she told lawmakers at a packed public hearing this month.

“I can only imagine the cost of spending seven nights in the hospital,” Johnson said. “It would have been much worse if I’d had thousands of dollars of copays to pay when he came home. This law seems to target and discriminate against public employees.”

House Bill 3075, backed by Democrats, would reverse the benefit rollbacks while keeping the hospital caps in place. Brown has indicated that she would back the reversal.

“It’s simply unfair to do a bait-and-switch on any worker at a time when health care is becoming increasingly more expensive and more difficult to access for working families,” Rep. Andrea Salinas, D-Lake Oswego, chair of the House Committee on Health Care and a chief sponsor of HB 3075, said at the hearing.

The session drew testimony from people around the state. They included teachers, representatives from unions like the Service Employees International Union, or SEIU; American Federation of State, County and Municipal Employees, or AFSCME; Oregon School Employees Association; Oregon Community College Association; and non-education groups like the Oregon Coalition of Police and Sheriffs, which is also concerned about 1 to 2 percent premium hikes for its members.

Will Cahill, superintendent of Lake County School District No. 7 in southeast Oregon, called the double coverage and opt-out benefits among his small district’s best employee recruiting tools. About 25 percent of the area’s population consists of married couples who are insured through the boards, he said.

“We have to throw out anything we possibly can to keep good, qualified teachers and employees in our district,” Cahill said. “Should (the elimination of benefits) go through, I’ve had a number of employees in my district say, ‘This is an incentive that, if it’s going to go away, I probably will too.’”

Rep. Rob Nosse, D-Portland, said confusion over SB 1067’s financial impacts and the effect on employers indicate that lawmakers may have moved too fast in trying to plug the state’s budget shortfall two years ago.

“The problem we’re struggling with, with SB 1067, was it was done at the very end (of the 2017 session) and without a very deep analysis of it. Now we’re getting the deep analysis and, shockingly, we’ve identified it’s not working the way we thought it was going to.”

You can reach Elon Glucklich at [email protected].

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