PEBB Must Make Deeper Cuts to State Employee Benefits

The full list of health benefit reductions will be decided at the board’s next meeting on April 19
The Lund Report

April 12, 2011 -- To stave off financial catastrophe, members of the Public Employees’ Benefit Board realized last Monday that they’d have to make even deeper cuts to the healthcare benefits of state employees and their dependents than they had earlier imagined.
 
Calling those cuts “wholesale slaughter,” Diane Lovell acknowledged those cuts would undoubtedly be painful. She represents the Association of Federal, State, County and Municipal Employees on the board. 
 
Initially, the board had hoped that changes to the 2012 plan year would lead to more financial stability the following year. However, that apparently won’t happen.
 
Fariborz Pakseresht, deputy director of the Oregon Youth Authority, posed that question to Mikel Gray, the actuary at Mercer, which provides financial services to PEBB. “Will we have to make more significant plan design changes to continue [to keep our budget] in positive territory?” asked Pakseresht.
 
Yes, acknowledged Gray, because healthcare costs are expected to continue rising in 2013, and there’s not enough money in state coffers to absorb those increases.
 
“[The board] should make cuts for 2012 that will cover both years [of the biennium], not just take a one-year approach,” added Gray. At a previous meeting, PEBB had explored tackling the 2012 and 2013 plan years separately.
 
Paul McKenna, research director at the Service Employees International Union 503, agreed with Gray’s analysis. "It's better to take the bull by the horns," he said.
 
Mercer presented the board with three funding scenarios similar to those presented at its March 23 meeting. They are: a 5 percent increase in funds for employee healthcare costs; keeping the current funding level; and Governor John Kitzhaber’s proposal to return to the 2010 funding level.
 
The deficit in the 5 percent increase scenario would be $20.5 million; the status quo scenario would put PEBB $56.7 million in the hole; and the back-to-2010 option would create a $104.5 million dollar funding gap.
 
The scenarios assume cuts ranging from $51.1 to $149.8 million. Board members have self-imposed a deadline of April 19 by which they must settle on a final slate of cost-saving plan design changes that will help them close PEBB’s gaping budget hole.
 
The cuts will be implemented next January and be effective for 2012. The board may also increase the out-of-pocket expenses from $1,000 to between $1,500 and $2,000, increase the employee deductibles from 0 to a $250 deductible for in-network treatment and $500 for out-of-network treatment, reduce chronic care coinsurance (to cover illnesses such as asthma or diabetes), create incentives for employees to choose less-expensive plan options, increase the co-pay for specialty prescription drugs and increase spouse surcharges.
 
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Comments

What is it about "employee contribution" towards their monthly health insurance premiums that PEBB Board members do not understand? I guess their free Weight Watchers benefit is not doing enough to help keep their renewal costs down--if they had more "value based" health plan designs and large employee contributions like OEBB members have--maybe the deficit wouldn't be as large as it is projected to be! I don't think they are "bending the cost curve" like the governor wants them to do--

We need to go in an entirely different direction, and institute the closest thing we can to single payer health insurance in Oregon. Why don't we combine the state employees with the Oregon Health Plan, and let any employers who want to buy in? We could have a real system, and push for payment by headcount taken care of, or something, rather than by treatment, generating so much unnecessary surgery. Mary King, Portland, Or.

Welcome to the real world, PEBB -- health care costs money, it's not "free" like Michael Moore says about 800 times in his movie (not calling it a documentary). The previous poster is right -- you wanna bend that cost curve, just get state workers to ante up for both premium and co-pay. You'll see some changes alright. People don't value or self-ration stuff they get for "free." It's not free for us taxpayers footing your bills.

How can a health plan provide a free service (Weight Watchers) to members when there are discussions about reducing other more viable benefits in the plans or increasing deductibles? Something is out of whack here!

What is it that the good people of Oregon do not understand? Our benifits are a big part of our pay. In the private sector i would be making $6 to $800 or more a month and pay minimal for insurance. We do not get anything for free. We work for our paycheck just like everyone else. I like most others that signed up to work for the state did so in good faith knowing I would not get rich but that I would have a good retirement and health insurance. The price all of us have paid is done over decades of service not the knee jerk reaction of those that chose riskier employment paths that are now failing. If the the people of Oregon had gotten their way a couple of years ago and let the politicians gamble our retirement benifits to put, as they thought, Oregon in the black, none of us would have a retirement left. The high roller get rich guys investing everyone's money except their own is what has gotten the state in the shape it's in NOT the people who that work for the state. Trying to save the state on the backs of its employees has failed for years. We are one of the highest taxed states in America and have the worst schools and roads. If you want to save some money and create new jobs take liquor control out of the state's hands. This is one of only a couple of states that is in the liquor trade. Let private ownership be the norm.

I cringe whenever I hear somebody say they deserve their benefits because they could make more in the private sector, or that they were promised these benefits. I work in the private sector, for a health insurance company, and I pay dearly for my benefits, as do most of us. Most of us in the private sector have also lost the pensions we were promised when we started our careers, as well as retiree healthcare coverage. I contribute 10% of my own income to my 401k in the hopes of having something there for me when I retire. Let's face it - things change. If you don't like losing some of your free or nearly free benefits then you are always welcome to leave the public sector and take a job out here in the private sector. I think you will realize just how much of a discrepancy there is between the two then.