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June 2010
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Download the June newsletter.
 
 
 

 
Utilization Driving Force Behind 2010-11 Rates & Plan Changes
ClaimsChart_June2010
 
No one likes rising health insurance premiums, including the OEBB Board and the carriers contracted to provide OEBB benefits.
 
It’s natural to assume that the carriers’ net revenues are increasing when rates increase, but the truth is that OEBB is a large enough group to require transparency of costs from the carriers. This means the carriers provide a breakdown of all the costs associated with the OEBB plans, and Towers Watson, OEBB’s actuarial consulting firm, conducts their own analysis on that data. This process ensures that the OEBB premiums are set using very conservative measures, intending for the carriers to bring in just enough premiums to cover their costs without any hidden profits. Unfortunately, the claims costs for OEBB members have been exceptionally high.
 
Anatomy of OEBB Premiums
 
Two types of costs feed into the calculation of OEBB rates -- actual claims paid to providers, and the administrative costs required to process those claims and to provide customer service.
Over 90 percent of the 2010-11 premiums are calculated to directly cover the claims costs anticipated for the upcoming plan year.
 
The only way to anticipate future claims is to look at previous claims and assume history will repeat itself.
 
OEBB Rates 2009-10
 
Because rates for 2009-10 needed to be set before the end of the 2008-09 school year, the calculations needed to begin again before  substantial OEBB claims data was available. Adjustments were made as more data came in, but rates needed to be officially approved with only about 5 months of claims available.
 
At that point in time, OEBB member claims appeared higher than average, but with the limited data available, consultants and carriers needed to consider that heightened awareness of plan benefits and a “clean slate” for time-scheduled benefits like annual physicals, dental cleanings and eye exams could lead to higher utilization in the first months of a new plan.
 
As more claims data became available, OEBB consultants and carriers recognized that the “richer” plans (those with lower deductibles and lower out-of-pocket maximums) were being utilized more and incurring higher claims costs. The Board approved assessing and implementing rate increases on each plan independently, thereby linking the rates directly to utilization. The plans paying out the most in claims would be assigned corresponding premiums to cover those costs.
 
OEBB Rates 2010-11
 
The renewal for 2010-11 was the first time a full year of claims history was available for review, and the data showed OEBB members continuing to have significantly higher claims costs than the national average1. The actual premiums collected from OEBB members in the 2008-09 plan year were less than the claims costs paid out and the carriers had to absorb those losses.  It obviously wouldn’t be a sound business practice to continue incurring losses year after year;  therefore, rates had to increase enough for 2010-11 to cover the projected costs of continued high utilization.
 
No Recouping Losses
 
It’s important to note that Towers Watson consultants verified that the OEBB carriers did not build any recovery of losses into their rates. They met with the carriers to review and approve the methodology used for the renewals, assuring that the rates calculated cover only the projected costs for that plan year.
 
How Plan Changes Affect Rates
 
Even if plan design remained the same, rising healthcare costs (the amount providers charge for their services) would require an increase in premiums just to cover the same services as the previous year. If benefits are added into the plan design, costs go up; if benefits are reduced, costs go down. This year Federal Healthcare Reform has also mandated reforms that will enhance all plans, including the OEBB plans, such as removing lifetime maximums and expanding dependent coverage.

 
With the economy in it’s current state, it may seem like a bad time to add new benefits to the OEBB plans; however, OEBB’s Guiding Principles dictate that the Board focus not only on price, but also on the improvement of employee health.
 
The OEBB claims data showed abnormally high rates of health problems related to overweight/obesity, such as joint replacements, lower back pain surgeries and office visits, asthma, sleep apnea testing and treatments, cardiovascular disease and diabetes. The Board chose to add a weight management program, which added a mere 0.38% to the ODS plans and only 0.63% and 0.64% to the Kaiser and Providence plans respectively. Therefore, the relatively small cost of adding the weight management benefit was approved as a worth-while investment for the future. This additional benefit along with all the other plan changes for 2010-11, were designed to  improve members’ health as well as reduce future claims costs.

 

 
Traveling this summer?
passport
 
OEBB’s existing Basic Life policies contain a benefit to help you with your travel plans as well as provide protection while you’re gone. MEDEX® Travel Assist is a worldwide medical assistance service that is included with OEBB’s Basic Life insurance policies through an arrangement The Standard has made with MEDEX® Assistance Corporation. This value-added benefit provides an additional sense of security for OEBB members with Basic Life insurance coverage and their eligible family members any time they travel more than 100 miles from home or internationally for trips of up to 180 days. A single phone call helps with medical care situations and other emergencies that may arise during travel. Pre-trip assistance is also available including passport, visa, weather and currency exchange information, health hazards advice and inoculation requirements.
 
To learn more about this valuable benefit included with your OEBB Basic Life insurance, click here.


 
Guarantee Issue Life & Disability Plans
 
This fall OEBB members will have a unique and important opportunity to elect “guarantee issue” coverage. The Standard is offering a ONE-TIME OPEN ENROLLMENT for Optional Life, Voluntary STD and Voluntary LTD, to all eligible OEBB members, including those who were offered these plans last year.
 
What does “guarantee issue” mean?
 
When life and disability insurance plans are initially offered, the carrier typically guarantees coverage up to a particular amount regardless of the member’s health. This is referred to as the “guarantee issue” amount.  If a member doesn’t elect the coverage during their initial eligibility period, but then they wish to elect it at a future annual enrollment, the coverage is “subject to underwriting approval”, meaning the insurance won’t go into effect until the member submits information about their medical history and the carrier approves them for coverage.  This medical information is often referred to as “evidence of insurability”, “proof of good health”, “medical evidence” or another variation of these phrases.
 
A Unique and Important Opportunity
 
During future annual enrollment periods (Fall 2011 and later), OEBB members will be required to provide medical evidence for any amounts of Optional Life Insurance unless they have at least $10,000 of Optional Life Insurance.  OEBB Members with at least $10,000 of Optional Life Insurance on themselves may elect to increase that coverage by up to $30,000 during each future annual enrollment period without providing proof of good health until they reach the $200,000 guarantee issue. Any increase above $200,000 for 2010-11 or in the future will require proof of medical insurability.
 
No one knows what the future may hold -- this open enrollment is a great opportunity to “get a foot in the door”.  By purchasing at least $10,000 Optional Life Insurance you’ll preserve your opportunity to increase your coverage amount next year, even if your health status changes.
 
Learn More
 
If you have any questions regarding The Standard’s plans, call The Standard’s dedicated OEBB Customer Service Department at (866) 756-8115.

 
Four Key Features
 
Optional Benefits
The benefits below are optional and may not be offered by all entities.  To be certain, check with your employer.
 
The Standard’s one-time open enrollment for Optional Life, Voluntary STD and Voluntary LTD
 
  1. Member Optional Life Coverage: Members (with amounts less than the guarantee issue or none at all) have the opportunity to elect up to $200,000 of Optional Life insurance for themselves without providing proof of medical insurability.
  2. Spouse/Partner Optional Life Coverage: Members may elect $30,000 of Optional Spouse Life for their spouse without providing proof of medical insurability.
  3. Voluntary Short-Term Disability Coverage: Members may elect Voluntary STD without a Late Enrollment Penalty.
  4. Voluntary Long-Term Disability Coverage: Members may elect Voluntary LTD without providing proof of medical insurability.

 

 
New EAP Benefit
RBH_logo_June2010
 
This fall OEBB will offer an Employee Assistance Program (EAP) including counseling, crisis response, supervisor resources, and work-life balance services, all with a focus on wellness. Reliant Behavioral Health (RBH) will be the carrier providing this service.

 
Dependent Eligibility Expanding
Dependent_Eligibility
 
Effective October 1, 2010, federal legislation will require OEBB health plans to extend coverage to dependents through age 25 with no residential or financial support requirement, regardless of student or marital status.  In anticipation of the requirement, effective June 1, 2010 OEBB plans will allow currently insured dependents to remain on a parent’s OEBB policy through age 25. (Entities with lower age limits currently in effect may continue to enforce their current rules through September 30, 2010, so check with your entity to confirm.)
 
Dependents under age 26 not currently insured on an OEBB plan may be added during the Open Enrollment period (August 15 – September 15) for coverage effective October 1, 2010.

 
Dental Care for Needy Kids
Dental_care
 
Many of Oregon’s children ages 6 - 12 who, until now, might not otherwise be able to afford dental care, now have access to free dental care through OEBB’s The Children’s Program formed through partnership with ODS, Willamette Dental, Kaiser and Oregon dentists.
 
More information about the program can be found on the ODS website.
 
 

 
Resources

Oregon Educators Benefit Board 
1225 Ferry St. SE, Suite B
Salem, OR 97301
Phone: (888) 469-6322
Fax: (503) 378-5832
E-mail: OEBB.benefits@state.or.us
  • Kaiser Permanente (866) 223-2375
  • ODS (866) 923-0409
  • Providence Health Plan (800) 878-4445
  • The Standard (866) 756-8115
  • Willamette Dental (800) 461-8994