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OSBA clarifies "big picture" on health insurance rates
June
12, 2007 Issue (102k  )
of Outlook and Review
Because OSBA's insurance rate estimate announced in early May is generating questions,
letters explaining the board's position were mailed last week to all OSBA members.
Executive Director Kevin McCann and OSBA staff will schedule visits with members at ESDs or other locations; contact OSBA if you'd like a meeting in your region.
"We see this as an opportunity to correct misinformation and to explain the bigger picture - because this issue isn't just about insurance," said Craig Prewitt (Phoenix-Talent), OSBA Health Insurance Trust chair. "Also, the announced 17.84 percent rate increase is a preliminary figure that simply guarantees the actual rates will not be higher. We're hoping for lower rates."
The OSBA trust announces preliminary rates each May, based on claims experience up to that point. OSBA will have two more months of experience to scrutinize with Regence before rates are finalized and made available after the OSBA board meets June 22. Rates for medical, dental and vision plans become effective Oct. 1 and will be posted online at
osbahealth.org/officials.
"Although OSBA strongly opposed SB 426, now we're committed to supporting the transition to OEBB," Prewitt said. "Our decisions regarding rates and ending the Health Insurance Trust are critical steps in that transition."
Buying down rates is a long-term strategy that ended with the passage of SB 426, which thrust the OSBA board into a major policy decision. The board, supported by trustees, consultants and attorneys, believes its decisions are in the best interest of OSBA members for a couple of reasons: First, although the insurance program is ending, OSBA must continue as a strong voice for members, for students, and for Oregon taxpayers. Second, if the board had chosen to buy down rates, not only would it have been a one-time buy down, but it would have set artificially lowered rates that districts and OEBB would have to come painfully to terms with in the near future.
Background to rate decision
Preliminary rate details were e-mailed and posted on OSBA's Web site the Monday after the May 20 OSBA board decision.
The decision was made after recommendations from OSBA's Insurance Oversight Committee, which worked with Mercer consultants. Regence BlueCross BlueShield of Oregon had proposed 18.96 percent increase, which Mercer negotiated to 17.84 percent.
Rate increase history
Rate increases have been volatile but cyclic over the past seven years. The rate increase average is 14 percent a year since 2000. For rate swings since 1984, see
this chart.
- 2000 - 19.3%
- 2001 - 13.4%
- 2002 - 26.1%
- 2003 - 16.6%
- 2004 - 9.3%
- 2005 - 8%
- 2006 - 1.4 %
- 2007 - 17.8%*
* Preliminary rate
Comparisons to other rates
- CIS (City County Insurance Services) 15%**
- OEA Choice 10.98%
- PEBB 10.2%
- Idaho Statewide Schools Health Ins. Program 16%
** CIS bought down the rate from 20%.
In some years, OSBA has applied reserves to subsidize or "buy down" large rate increases. However, with the termination of the OSBA Health Insurance Trust caused by the state's insurance pool, which will begin next year, the trust is no longer a renewable resource to buy down rates.
In May, the OSBA board voted to end the trust on Oct. 1, and to preserve assets for future needs of OSBA members, in accordance with the OSBA Health Insurance Trust agreement. It appointed the Insurance Oversight Committee consisting of Craig Prewitt, former chair of the OSBA Health Insurance Trust (Phoenix-Talent), chair; OSBA past-presidents David Beeson (Silver Falls) and Sherry Duerst-Higgins (South Lane/Lane ESD); and Executive Director Kevin McCann, program administrator.
"We discussed a buy-down from the remainder of reserves to soften the rate increase, but felt it would be irresponsible not to preserve assets to keep OSBA and its services strong," said Prewitt.
All benefit-plan provisions will remain the same for the next insurance year, except that mental health and chemical dependency benefits will be added, as mandated by state law. Those conditions will be covered as other illnesses are, without visit and day limits.
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