The Oregon Educators Benefit Board approved a list of creative solutions to keep the health benefits for the state’s teachers below the caps mandated by the Legislature.
The inflation caps were put in place by physician and former Gov.. John Kitzhaber, based on the belief that healthcare costs could be curtailed through more efficient coordinated care and avoiding higher costs to the state’s educators or cutting benefits.
OEBB’s health plans remain costlier than private-sector health packages, but the board’s inflation has been limited to 3.4 percent, much lower than the state health benefit cost trend, which is back up to 8.1 percent after a few years of low inflation that followed the Great Recession. Nationally, healthcare costs are rising at 6 percent a year.
The cheapest OEBB plan, from Kaiser Permanente, costs $10,300 a year, while the richest OEBB Cadillac plan from Moda Health costs $18,000 a year.
In approving rates for the 2018-2019 school year, the OEBB board made a series of adjustments that reflect the spirit of coordinated care -- but faced with a 5.3 percent rate hike if it did nothing further, OEBB did vote to cut the pharmaceutical benefit and raise costs for dental procedures.
OEBB Chair Geoff Brown helped direct a series of decisions that did the most to soften the blow to teachers while keeping inflation below the 3.4 percent ceiling, including shaving the administrative fee that OEBB staff at the Oregon Health Authority charge and pushing back on a recommendation from consultants that OEBB raise the deductible for PPO plans by $100 across the board.
OEBB will now operate with a closed drug formulary -- and some high-cost drugs will not be covered if an alternative treatment is available. Speciality drug costs for OEBB through Moda Health have nearly doubled in the past four years, from $18 per member, per month, to $33 per member, per month.
Additionally, to head off a 12 percent hike in premiums for oral care from Willamette Dental, OEBB implemented a list of copayments for intensive dental procedures, which have until now been covered at no extra cost.
Office visits will remain $20 and fillings will be free, but crowns will cost $250 apiece, dentures $100 and $50 for root canals. These charges will be added to both Willamette and Kaiser Permanente Dental options to make them uniform, decreasing Kaiser premiums by 5.8 percent while limiting the Willamette premium increase to 6.7 percent.
The Delta Dental plan, provided by Moda, will offer a new benefit, with composite amalgam covered for back teeth in addition to the cheaper mercury amalgam.
The board’s budget assumes more teachers will select high-deductible plans and options with coordinated care models, which have lower premiums for employees than traditional and costlier preferred provider organization health plans.
OEBB scotched the Healthy Futures program, a wellness regimen that offered members lower deductibles if they completed online surveys and committed to a healthier lifestyle. “We’re not seeing the evidence that that’s making a difference” said Steve Carlson, an actuary from Towers Watson.
Trimming the pharmaceutical benefit lowered costs about 0.4 percent, while scrapping Healthy Futures lowered rates 0.6 percent. Towers Watson estimated premiums will be lowered by another 0.6 percent as members gravitate toward coordinated models and 0.3 percent through the introduction of a new plan offering with a $2,000 deductible.
After a review of life insurance and disability insurance rates, Standard Insurance offered to cut OEBB’s life and short-term disability rates by 15 percent, while keeping long-term disability rates flat.
OEBB decided against more dramatic changes which may be necessary down the road, including ending PPO plans altogether and forcing all teachers into coordinated care plans, which have smaller physician and hospital networks.
“The trend line has to get lower,” said board member Bob Stewart. “This is a train wreck.”
Reach Chris Gray at [email protected].