Legislation Would Allow School Districts to Opt Out of OEBB
Proponents claim individual districts will save more; Opponents warn of weakened purchasing power
March 15, 2011--A pair of bills allowing smaller school districts to opt out of the Oregon Educators Benefit Board (OEBB) and seek health insurance elsewhere is dividing the state’s education groups.
Some warn that passing the bills will weaken OEBB members’ purchasing power, while others claim the board’s coverage has led to increased costs and decreased employee satisfaction.
“We have a high priority of providing quality insurance to employees,” Ron Wilkinson, the superintendent of Bend-LaPine school district in Central Oregon told the House Health Care Committee Monday. “We’re running into difficulty trying to do that with OEBB.”
House Bills 3244 and 3366 would give districts with 500 employees or fewer the choice to buy insurance outside OEBB and thereby ending for them what would become a three-year experiment.
Since 2008 when OEBB was created, most of Oregon’s school districts and community colleges have been forced into the statewide pool, which now provides coverage to more than 150,000 people. Continued double-digit rate increases and mixed results among school districts have renewed calls for greater exclusions.
“[Our district] has seen increased costs in premium co-shares, deductibles, and out-of-pocket costs” since joining OEBB, said Carla Gunter, the benefits coordinator for the Salem-Keizer School District. “We want to make sure they don’t rise any higher.”
“We’ve had employees who’ve dropped coverage or significantly reduced their coverage,” said Wilkinson. In fact, 5 percent of Salem-Keizer’s school employees are no longer receiving insurance through the district because, according to Wilkinson, “they literally can’t afford it.”
Additionally, district employees have had to pick up the work that was previously provided by insurance providers, Wilkinson said.
But Ron Gallinat, OEBB’s vice-chair, painted a different picture. He presented legislators with the savings incurred by OEBB - $39.6 million for the 2008-2009 plan year, and $45.6 million projected for the 2010-2011 plan year – “mostly due to reduced administrative costs for member benefits.”
The problem with allowing districts to opt out, said Galliant, is that those most likely to do so would be districts with the healthiest employees, leaving OEBB with the highest-risk people and less ability to moderate healthcare costs across the remaining population.
That would mean higher premiums for those left in the OEBB pool – an increase of about 6 percent if 20 percent or more of OEBB’s current membership opted out, according to Towers Watson, the board’s actuarial firm.
“The strength of OEBB is in its size,” said Mike Montgomery, a Spanish teacher in the Salem-Keizer district and a member of the Oregon Education Association.
“If we allow people to leave OEBB, those left will be more expensive to insure, and OEBB will go out of business.”
This week’s arguments mirror those years ago in the state legislature over the multiple sessions it took to create OEBB in the first place. Certain school district administrators have been airing their grievances since at least last year, saying that they were doing a much better job containing costs and negotiating with insurance companies before OEBB took over.
“Where are the savings that Senate Bill 426 (which created OEBB in 2007) were supposed to bring back to the classroom?, Debbie Johnson, Beaverton School District’s health resource coordinator, asked the Board last year. “We can do it for far less and have been a credible group and successful in managing our own pool of people.”
That fall, OEBB members were hit with double-digit rate increases.
“There’s widespread anger among district employees,” said Bend-LaPine’s Wilkinson.
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Read more of The Lund Report’s OEBB coverage here.
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That's right, where are the savings for Oregon classrooms? The March 2011 OEBB Board meeting proposed savings of $52 million over the last 3 years--even the Board members stated that when this is shared with Oregon School Administrators--they don't or won't believe these numbers--that's because it is just smoke and mirrors--not real savings.
OEBB members better be ready for another round of double digit increases---of course, OEBB will just blame the members' utilization for the high increases--maybe somebody forgot to tell Mike Montgomery of Salem Keizer that his state union group (OEA) has on their website the reason for OEBB--"you know when you buy in bulk, you save money!" Unfortunately, no savings for those districts in OEBB unless some of these OEBB "opt out" bills are passed.
Mike Montgomery doesn't have to worry about OEBB going out of business--it is doubtful that they will even get past the OEBB taskforce that convenes in 2011 to review their efficiencies (or lack thereof) and reports to the Oregon legislature in 2012.
OEBB hasn't even prepared for their members who will be laid off this school year due to huge K-12 state budget deficits--guess what people do when they are losing their health coverage? They USE it! I don't think anybody is even factoring this fact into renewals for Oct. 1---