The state’s school districts and teachers should get ready for a financial hit -- the Oregon Educators Benefit Board approved a whopping 9 percent premium increase for Moda Health and a 6 percent hike for Kaiser Permanente.
The vote came after a lengthy private meeting of the OEBB board, but little to no public discussion of the giant rate hike among OEBB board members or the new costs to school districts.
The large rate hike for Moda will be offset for educators who choose the insurance company’s “Synergy” and “Summit” health plans -- which are modeled along coordinated care lines and built on a primary care home model. These members will only see their premiums go up about 1 percent.
But the Synergy and Summit plans -- which first appeared as a new option for public employees in the new Public Employees Benefit Board contract -- are not available throughout the state -- potentially because Moda has been unable to secure contracts -- and Corvallis, Roseburg and the Coast will face the brunt of OEBB’s decision.
The Summit plan uses the network built by Moda’s coordinated care organization in Eastern Oregon; Synergy has been formed as a new alliance between Salem Health, Legacy Health and Oregon Health & Science University, while expanding service in Lane County and Jackson and Josephine counties through the Asante hospital chain and Sky Lakes Medical Center in Klamath Falls.
According to high-ranking sources, Moda -- formerly known as ODS Health Plan -- is attempting to compete head on with Providence Health Plan -- and become a major player in the commercial marketplace.
Unanswered questions remain such as how Moda intends to reduce its costs with this new enterprise and whether hospitals and physicians are willing to accept lower reimbursement rates. It’s also unknown whether teachers who choose this option was have a more limited panel of providers in their network.
OEBB also approved a 5.5 percent rate hike for those in Kaiser’s dental plan; ODS, Moda’s dental offering, had their rates increased by 4.45 percent, while premiums for Willamette Dental were flat.
Kaiser held its vision rates flat as well, while Moda Health was awarded a 6.9 percent increase for vision care.
Consultants from Towers Watson justified some of the Moda Health rate hike as attributable to the Affordable Care Act -- but only about 1 percent of the increase can be directly tied to assessments for reinsurance, at both the federal and state levels. Other new costs the consultants associated with the federal law include free lung cancer and Hepatitis C screenings and a prohibition on annual limits on hearing aids for children.
Several of the Moda plans will reduce deductibles and coinsurance because they were deemed too high for Affordable Care Act standards, raising premiums an additional 1 to 2 percent for those options.
Medical Inflation Still <1%
The consultants sold the board on Moda’s rate hike by noting that overall medical spending had spiked nearly 10 percent in the first quarter of 2014 compared to 2013, holding up an article from USA Today -- but that statistic obscured the fact that annual medical inflation since the start of the recession has remained minuscule, at less than 1 percent in March 2014, according to the same article. That’s the slowest rise since the early 1960s and lower than inflation in the rest of the economy, according to the Wall Street Journal.
More health services are being purchased, but that doesn’t mean the price of those health services are going up at an equal rate. If Chevrolet sold more trucks, its sales and profits would go up, but the price of the trucks might stay the same.
Much of the new medical spending is attributable to the millions of previously uninsured people now covered by Medicaid and private qualified health plans that are paying for backlogged medical expenses.
“Spending going up is not the same thing as prices going up. There’s just more people going into the system,” explained Jesse Ellis O’Brien of the Oregon State Public Interest Research Group. “It’s not necessarily bad news for the consumer at all.”
OEBB had already been paying some of the highest rates in the state for hospital services through Moda, with the average hospital charging OEBB nearly three times the cost of Medicare, topping out at 411 percent of Medicare at Willamette Valley Hospital in McMinnville.
Moda, the sponsor of the Trail Blazers’ arena, may be attempting to further dump costs onto the state teacher’s benefit plan to hedge against the high rate of claims it’s undoubtedly receiving from its dominating share of the Cover Oregon market, which is much older and therefore riskier than the general population.
Deputy OEBB administrator Denise Hall told The Lund Report that her staff intends to inform teachers about the advantages of choosing the Synergy or Summit options where available. In school districts that require cost-sharing, teachers will share in the savings and only see their premiums go up 1 percent.
“The encouragement is they’ll have lower rates,” Hall said.
Kaiser Permanente will be offering educators an additional high-deductible health plan, which OEBB expects will offer school districts slight savings compared to Kaiser’s other plans.
Editor's Note: An earlier version of this story incorrectly called Sky Lakes Medical Center by an outdated name. We regret the error.
Chris can be reached at [email protected].