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PEBB Slides Under Cost Caps for Biennium at Negotiation Table

The Public Employees Benefit Board signed off on 2017 premium rates for its menu of health plans, which after extensive negotiation, came in at a 4 percent hike, for an average of 3.2 percent over two years. A Providence researcher also showed the health engagement module is lowering costs for people with more complex medical needs.
June 22, 2016

Harder-nosed negotiations between the Public Employees Benefit Board and its insurers should allow the health plan for state workers and university employees to meet the budget limits set by the Legislature for the 2015-2017 biennium.

Moda Health agreed to lower its premium increases from 6.2 percent to 3.5 percent,after PEBB agreed to expand Moda’s service area into southern and central Oregon. Currently, the health plan is only an option in eastern Oregon and the Portland-Salem area.

Providence Health Plan had already agreed to lower its premium increases for its medical home “Choice” plan from 5.4 percent to 3.2 percent and its statewide plan from 9.5 percent to 8.2 percent.

To meet the Legislature’s inflation cap of 3.4 percent, more people will have to choose a less expensive health plan, according to Ali Hassoun, PEBB’s director of operations, who noted that public employees have been migrating to these plans for five years, away from the more expensive statewide plan, and will likely continue to do so.

Kaiser Permanente also agreed to reduce its premium increase for PEBB from 7.1 percent to 3.3 percent.

All-Care, a coordinated care model based in southern Oregon, was denied its request for the same coverage expansion as Moda, and its premium increase will be stay at 5 percent.

PEBB board members are concerned about the risk corridor policy with All-Care, which aides the health plan with additional revenue for higher cost members.

These adjustments mean that overall PEBB premium rates will rise by just over 4 percent in 2017 -- and when combined with last year’s increase of 2.6 percent, the total averages to about 3.2 percent, putting PEBB below the 3.4 percent cap on costs.

PEBB is not out-of-the-woods for future budgets, however, and if the Legislature again caps its budget at 3.4 percent during the 2017-2019 biennium, PEBB will likely have to dig into its reserves to cover premiums and claims.

Health Engagement Savings

PEBB also received word that its health-engagement module is paying dividends, as people who have used the program showed a savings of $38 per month on average.

Bill Wright, a research sociologist at Providence Health & Services, did put some caveats on those savings, noting that the savings were overwhelmingly from older and the highest-cost members, saying these savings could easily be overturned by future volatility.

The health engagement model did not seem to provide savings for younger, healthier people -- although these employees could cost less in the future by engaging in healthy lifestyles.