State Audit Gives PEBB, OEBB Mixed Review

Two state-run boards that handle health insurance for more than 301,000 Oregon public employees and their families are doing a good job limiting the growth rate of their health care expenditures, a state audit found.

But the review, by the Oregon Secretary of State’s Office, also cited areas where the Public Employees’ Benefit Board and the Oregon Educators Benefit Board need to improve. PEBB oversees health plans for employees and their families at state agencies, universities and other public state entities. OEBB oversees health plans for education workers and their families at school districts statewide.

The audit cited the Oregon Legislature’s use of PEBB resources to plug state budget holes.

Over the years, PEBB built up reserves from premiums paid by participating agencies and their members. Those reserves ended up reaching nearly $435 million, surpassing the cap the board had set. The Legislature used some of the excess to pay general government expenses, which violates federal spending rules.

The federal government fined PEBB $12 million after the Legislature used $120 million for budget expenses in 2017, the audit said. Another plan by the Legislature to take more money -- $15 million -- to patch the budget next year will lead to a $2.5 million fine in 2022, the review said.

In response to the finding, PEBB said it would look at ways to reduce the size of its reserves.

The two boards also agreed with other findings in the audit, which was released Wednesday, and they said they are taking steps to comply. 

The two boards agreed they must communicate better with members to help them use their insurance coverage to make good health choices; collect and analyze employers’ and members’ experiences; clarify agreements they have with the many contractors that implement the health insurance plans that the two boards offer; improve how contractors identify improper claims; and create a committee that will provider member feedback to the boards.

PEBB and OEBB are important parts of the health insurance network in the state. Together, they cover 7% of the state’s population, according to the audit. The boards are small agencies: Their operations are combined, and they total about 40 employees. They offer members a mix of health insurance coverage options through a variety of commercial insurance companies, including Providence, Kaiser and Moda. Contractors paid by PEBB and OEBB carry out the nuts and bolts of administering the coverage.

The two boards have kept annual per-member insurance cost increases at or below 3.4% since 2014, “which was generally half the cost increases experienced in the commercial markets,” the audit notes. “Oregon’s self-insurance market

generally grew 7.5% a year and Oregon’s commercial insurance market grew between 8% and 9% during the same time period,” the audit noted.

 A big reason for the savings: With their large pool of members – a significant slice of Oregon’s population – the boards can negotiate better rates with commercial insurance plans.

Oregon legislators and health policy experts point to PEBB and OEBB as an example of how large membership numbers translate into negotiating power with insurers and health care providers. 

The Oregon Legislature has two task forces working on key health care cost issues: how to ratchet down per-person health care cost increases to 3.4% a year, and how to provide affordable health care for every Oregonian.

You can reach Christian Wihtol at [email protected].




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