February 2, 2007 Issue (63k ) of Legislative Highlights

SB426, the bill to create a state-run mandatory insurance pool was sent forward to the Ways and Means Committee with a do-pass recommendation by the Senate Education and General Government Committee in a 3/2 party-line vote yesterday.

Yes votes came from Senators Vicki Walker (D-Eugene), committee chair; Rick Metzger (D-Welches) and Ben Westland (D-Bend). Senators Jeff Kruse (R-Roseburg) and Frank Morse (R-Albany) voted against the bill.

Action on SB 426 has been expedited; the bill was referred to the Education Committee Jan. 29 and received a hearing Feb. 1, after which it was sent to Ways and Means.

Chair Walker allowed 45 minutes of testimony from each side before the vote. Sen. Morse commented on the fact that SB 426 proponents cited a 2005 Michigan study rather than producing compelling analysis of Oregon's existing health insurance pools, the OSBA Health Insurance Trust and the Public Employees Benefit Board.

Proponents of the bill included its sponsor, Sen, Ryan Deckert (D-Beaverton); the American Federation of Teachers; the Oregon School Employees Association; the Oregon Education Association and Gov. Kulongoski's office.

In voicing OSBA's strong opposition to SB 426, OSBA Executive Director Kevin McCann, who is the OSBA Health Insurance Trust administrator, explained the independent public nature of the Health Insurance Trust Board and described how OSBA's insurance endorsement fee supports local school boards and districts by providing crucial low-cost services, allowing them to put more money directly into teaching students. He pointed out that PEBB has a similar fee and that the same is proposed for OEBB.

McCann said that SB 426, rather than saving money, will cost local districts more and will eliminate community-based decision-making, efforts to keep health-care costs as low as possible, and competition in the open insurance market, which keep rates lower.

McCann told the committee that 85 percent of districts participate in OSBA Health Insurance Trust pool, including 14 of 17 community colleges in the state, for a total of nearly 100,000 lives of all ages in virtually every community. The school employees insured by OSBA Health Insurance Trust plans - 37,100 of them - represent 64 percent of all school employees in the state.

Testifying against the bill were Craig Roessler, Silver Falls superintendent and OSBA vice chair of the trust board; Ron Wilson, OSBA associate executive director; Sue Robertson, chief human resource officer, Beaverton SD; Debbie Johnson, Beaverton SD health resources coordinator; Dr. Mary Spilde, president of Lane Community College; Rebecca Owen, PacificSource Actuarial Services; and Chuck Bennett, director of government relations, Confederation of Oregon School Administrators. Also opposing the bill were Johanna Vaandering, president of Beaverton Education Association, and Bob Baldwin, an American Federation of Teachers leader from Lane County.

Wilson noted that the proposed OEBB model is based on PEBB. He compared benefits and costs of similar preferred provider plans offered by the OSBA trust and PEBB, which share a carrier, Regence BlueCross BlueShield of Oregon. He told the committee that projected cost increases for similar plans in the proposed state pool for all school districts, ESDs and community colleges would be $99 million more.

BEA President Vaandering touted her district's efficient, affordable health insurance plan and said she opposed a statewide pool lacking controls at the local level. She asked the committee to consider opening PEBB to allow school employees to join.

AFT's Baldwin told the committee that SB 426 is about labor relations, not health insurance costs, and said it usurps local control. He recommended that the Legislature address redundancies in health care costs and the plight of the uninsured. Baldwin told the committee that if insurance in a state-mandated pool costs more, it will come from wages or layoffs. He also said that insurance decisions are better made locally.

Bennett told the committee that COSA strongly supports cost savings but believes that SB 426 will cost more. He urged the committee to request an independent study capable of proving whether or not savings can be realized by the mandated pool before approving SB 426.

"Data is out of date and so divergent it would seem difficult to make an informed public policy decision with what you've got," he said.

In the committee work session, Sen. Kruse said that "nothing in the bill drives us to cost-control measures."

"That's my main concern," he said. "That over time this becomes PEBB for schools and unaffordable."

Sen. Metzger said the committee needed to take a risk on SB426 because the status quo is not manageable and that, although there is no certainty that the bill will save money, not doing anything is more dangerous.

Although he voted against a state-mandated-pool bill in 2005, Sen. Westlund's only comment was "I'm fine with the bill."

Sen. Morse said he had a problem with making a major shift and that by reducing competition the door to inefficiency is opened. He said that if reducing competition was aimed at the private sector, the hearing room would have been full. Morse said he would petition for a Legislative Fiscal Office independent study and urged the committee to do a study before making such a major change.

Chair Walker concluded the work session, insisting that the state will retain local control by allowing local districts to bargain and employing a task force to provide oversight to a new OEBB board. She said the committee's duty is to provide accountability and value to Oregon taxpayers, and drive dollars into the classroom.

The committee approved an amendment to make members of the proposed Oregon Employees Benefit Board subject to senate confirmation. After Ways and Means, SB 426 must be considered by the full Senate and House.

OSBA has a financial-impact calculator that compares each district's estimated costs in the OSBA Trust and the proposed pool. OSBA urges all members to call their senators and representatives to inform them of SB 426's impacts on their districts; legislators may be reached by calling the Capitol Switchboard, 800-332-2313.