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New health plan raises concerns

School board votes to oppose plan
by: Rob Cullivan, Following a Thursday, March 15, meeting at David Douglas School District offices, Chuck Rhoads, director of business services for the Reynolds School District, and James Sager, the governor’s education policy advisor, discuss legislation that will create a statewide insurance pool for school employees.

A statewide health insurance pool for school employees is being touted as a cost-cutting measure, but some East County school leaders are concerned it will drive up districts' health care costs.

Senate Bill 426 has been passed by the Legislature, and Gov. Ted Kulongoski is expected to sign it into law Wednesday, March 21. The new law will create a statewide health-insurance pool for school employees; create an Oregon Educators Benefit Board to contract a menu of health plans, which could be offered by multiple providers, from which districts could purchase; and bars most districts from purchasing their own plans. The plan is to be implemented in 2008.

In certain cases, districts that are already self-insured and offer plans comparable or superior to ones offered by the pool, may be exempted from the pool, according to James Sager, the governor's education policy advisor.

Proponents believe the plan will decrease health costs for school districts by eliminating administrative duplication in such areas as claims processing.

'Having this one centralized processing of insurance information will reduce redundancies,' Sager said.

However, opponents of the new system say it will force districts to purchase plans from a single provider regardless of cost or design of plan benefits. Opponents include the Oregon School Boards Association Health Insurance Trust, which insures all or most employees in 202 of the state's 235 school districts.

On its Web site, the trust argues that it already provides plans for 37,100 employees, and that its own studies have shown increasing the size of the pool will have negligible results in savings.

Meanwhile, the Reynolds School Board voted unanimously Wednesday night, March 14, for a resolution opposing the new plan.

'(W)hen school districts have the freedom to find the lowest cost plans offering the best benefits for the money, they can invest more money in hiring teachers and funding programs that help students learn,' reads the Reynolds resolution.

The resolution adds that Reynolds projects health-care costs will increase by $2.8 million to $3 million under the new plan.

Along with House Speaker Jeff Merkley, D-Portland, and Chip Terhune, the governor's chief of staff, Sager met with school representatives, including leaders of the Reynolds, Centennial, David Douglas, Portland and Parkrose school districts, on Thursday night, March 15, at David Douglas district offices.

Sager cited research showing health insurance costs for education employees are expected to increase from $800 million this year to $1.175 billion by 2012. The new plan is projected to reduce school districts' health-care costs by as much as 6.3 percent statewide, he said.

In part, Sager said opponents may be calculating projected costs of the new plan by mistakenly assuming that districts would not be able to negotiate cost-sharing with their employees, given that state employees don't pay any share of their premiums. However, he said, the new system allows school districts to negotiate cost-sharing with their employees. He also said the new plan will provide strength through numbers.

'The negotiating power of a group this large will help us control costs through providers,' he said.

Chuck Rhoads, director of business services for the Reynolds district, said the state should take more time to study the proposed plan. He said school leaders like himself would like to see the state study how pooling would save costs on a district-by-district basis.

'It's difficult for us to make a decision based on data that the state has never shared with us,' Rhoads said.

Sager, however, said its consultants have concluded the new system will cut costs, and that the state can no longer afford to wait.

'We cannot sustain the runaway costs for insurance,' Sager said. 'It just takes more and more dollars away from the classroom.'

Robert McKean, superintendent of the Centennial School District, said his board has taken no formal position on SB426. However, he said there is 'significant concern about this legislation.'

'The fear is this may end up costing more not less than our current insurance,' he said. 'A number of our board members and I asked our legislators to engage in further study and discussion prior to passing this legislation.'

However, he said if Kulongoski signs the bill, the district will implement the plan 'as effectively as possible.'