OEBB Picks New Director Candidate with Strong Resume but Checkered Past

James Raussen, a government consultant specializing in insurance, comes to Oregon after working in the Chicago comptroller’s office and Ohio state government. His Chicago boss, whom he followed from Ohio, is now in prison, and Raussen was linked to a questionable insurance brokerage contract in Chicago that caused Mayor Rahm Emanuel to limit the purchasing power of the city comptroller.

After two years without a permanent director, the Oregon Educators Benefit Board has settled on its choice for a new administrator who will guide them toward a new contract, likely one with a coordinated care focus such as adopted by its sister health plan, the Public Employees Benefit Board.

The choice of James Raussen, a healthcare and insurance consultant from the Midwest, comes after an exhaustive nationwide search and two rounds of applications. Raussen still has to formally accept the offer.

The first search, for a joint OEBB-PEBB director, failed to produce a satisfactory applicant, leaving PEBB to promote longtime deputy Kathy Loretz and OEBB to strike out on its own, this time enlisting the Oregon Health Authority’s executive recruitment team to do a more thorough search.

Raussen has an impressive resume of high-responsibility work for the Ohio state government and Chicago municipal government, but his ties to a former boss in prison and a questionable insurance deal raise questions about whether OEBB properly vetted the candidate and whether he assured them he did nothing wrong, and that a trail of bad press is not a reflection on his character, ethics or judgment.

Heidi Williams, the chief operating officer of OEBB and the current acting director, did not respond to questions about the vetting process by press time.

One reason he may be coming to Oregon to run the teacher’s health plan is the prospect of a clean state after a once-promising government career was derailed by his ties to a corrupt Ohio treasury official, Amer Ahmad.

Raussen worked with Ahmad first as an Ohio state insurance director while Ahmad was the deputy to Democratic Ohio Treasurer Kevin Boyce. He then came to Chicago to work under Ahmad in the city comptroller’s office after Boyce lost his re-election bid in 2010.

In one of the more embarrassing episodes of Mayor Rahm Emanuel’s tenure, Ahmad was hired to be the city comptroller on Boyce’s recommendation after the ex-treasurer knew the FBI was investigating Ahmad for a fraud and kickback scheme related to his work in Ohio; upon his conviction in 2013, Ahmad fled to Pakistan before being extradited back to the United States this August and sentenced to 15 years in prison for accepting a $522,000 bribe to give state business to his cronies while at the Ohio treasurer’s office, according to the Chicago Tribune and the Dayton Daily News.

Raussen was never implicated in the Ohio allegations, but he was involved in an incident at the Chicago comptroller’s office that raised eyebrows. In 2011, Emanuel pushed through an ordinance that allowed Ahmad, the city comptroller, to sign off on insurance contracts without submitting them to a public bidding process.

Ahmad then used his new insurance-buying authority to pay up to $2.7 million to Cincinnati-based USI Midwest for insurance brokerage services, most of it for policies at Midway and O'Hare International airports. According to the Chicago Sun-Times, the Chicago lobbyist for USI Midwest had been an early campaign supporter for Raussen during his elections for the Ohio state legislature, where he represented a suburban Cincinnati district as a Republican.

Raussen outlasted Ahmad at the Chicago comptroller’s office before resigning in May 2014. Mayor Emanuel ultimately cleared Raussen and Ahmad of any wrongdoing at the city, but the episode did prompt the mayor to take back the comptroller’s authority to independently purchase insurance services and restore those contracts to the normal procurement process.

Raussen would probably prefer to be tied to his earlier political career before his work with Ahmad. He served three terms in the Ohio House of Representatives, where he chaired a state healthcare reform committee before his appointment by Democratic Gov. Ted Strickland as the director of insurance and financial services at the Ohio Development Department.

Assuming he formally accepts the administrator’s job at the Oregon Educators Benefit Board, Raussen will oversee a bidding process for a new health insurance contract for OEBB next summer and fall.

The new contract is seen as critical to controlling costs at OEBB, where high medical inflation has continued to eat into the state education budget. OEBB and the state’s school districts also face the specter of a 40 percent excise tax on their comprehensive health plans in 2018, popularly known as the “Cadillac Tax.”

Last year, under the guidance of former Kaiser Permanente executive Kelly Ballas and Mercer actuarial consultants, PEBB revamped its health plans to encourage public employees to participate in coordinated care models, giving the option of local CCO organizations in Eugene and Medford and pushing Providence Health Plan and Moda Health to adopt such a model in other parts of the state.

Both OEBB and PEBB are bound by a 3.4 percent medical inflation cap, which while grounded in statute by the Legislature, may eventually prove more aspirational than effective.

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