Facts about OSBA’s
Health Insurance Trust
F or 40 years, the Oregon School Boards Association Health
Insurance Trust has offered school districts, education service
districts and community colleges comprehensive, high-quality
Instead, the proposal tries to make a case based solely on
monthly health care premium payments.
If the new state program was modeled after the Public Em-
and cost-effective health insurance for their employees – regard- ployees Beneﬁts Board (PEBB) – the state workers’ insurance
less of district size or geographic location. Today more than provider – our research shows that premium rates for the manda-
92,000 school employees and their families are covered by tory school employee health insurance pool would be higher than
OSBA trust plans. what most OSBA Health Insurance Trust members pay now.
OSBA members are free to choose among the trust’s plans We compared 2007 PPO (Preferred Provider Organization)
or insure with local carriers or self-insure if they can save even rates for medical, dental and vision coverage in the OSBA pool
more. Of Oregon’s 235 school districts, ESDs and community to PEBB. Based on the actual mix of single, two-party and family
colleges, 202 insure some or all of their employees through coverage in medical, dental or vision insurance, the 202 members
OSBA trust plans. of the OSBA pool and their employees would pay $99 million per
OSBA opposes a proposal to create The OSBA Health Insurance Trust premium rate increase for
a state-controlled health insurance pool 2006-07 was 1.3 percent. PEBB’s premium rate increase for 2007
was 8 percent.
Proposals to create a state-controlled health insurance pool More than 92 percent of OSBA trust members “cap” the
raises serious questions for school boards, school employees and amount they pay for insurance premiums, which means employ-
their families. ees in many cases are paying part of the cost of their insurance.
• Can a mandated health insurance pool save school districts PEBB insurance premiums for state employees are fully paid by
more than the savings already available through the OSBA the employer.
Trust statewide pool?
• Would forcing school districts that currently have lower-cost Wouldn’t a bigger pool mean lower
programs into a state-controlled pool make insurance more
expensive for them? premium rates?
• What happens to local carriers if the state creates a manda- It seems logical that a larger pool would bring down the total
tory health insurance pool? Does it eliminate competition and cost of the program. However, according to the National Asso-
health care plan choices? ciation of State Personnel Executives (September 2006), larger
These questions should be studied and answered before action pools typically do not save anything more since the economy of
on any proposal of such magnitude is seriously considered by the scale is achieved with around 20,000 participants.
2007 Legislature. The OSBA Health Insurance Trust is the largest account at
Regence BlueCross BlueShield of Oregon.
The OSBA trust provides health insurance plans for 37,100
The OSBA Health Insurance Trust school employees – including dependents, that’s more than
has gained the business of 85 percent 92,000 people covered by trust plans. An even larger “pooling”
of the association’s members by of employees under a state-government-run monopoly is not
likely to produce further economy-of-scale beneﬁts.
providing a proven, valuable product The most important factors for cost effectiveness for large
at a competitive price. pools are:
• The group’s “experience rating,” which includes:
– How much the group uses health services. (Factors affect-
Why does OSBA oppose a mandated ing experience rating include age of participants, illness
and injury occurrences.)
health insurance pool? – How the overall plan is managed.
The proposal relies on incomplete information that does not • The plan’s eligibility rules. (Who is allowed into the plan.)
address the real drivers of higher health care costs: • Plan design – Beneﬁts; employee deductibles, co-pays, etc.;
• Aging employees and the plan’s drug beneﬁts.
• Skyrocketing prescription drug costs
• Use of expensive “high tech” medical procedures
• An Oregon law requiring school districts to keep retirees in
the same plan as current employees
The Facts about OSBA’s Health Insurance Trust Continued
How does the OSBA Health Insurance Trust How is the endorsement fee used by OSBA?
keep costs down? The money is returned to members. The endorsement fee al-
Competition in the insurance marketplace keeps OSBA’s lows OSBA, a non-proﬁt organization, to subsidize the following
rates low and competitors’ rates in line. Since it began in 1966, services offered to member school district, ESD and community
the OSBA trust has competed on the open market. college boards: leadership training, policy services, employee
The trust has earned the business of 85 percent of the associa- contract negotiations assistance, human resource development,
tion’s members by providing a high-quality product at a competi- communications services, budget and public contracting assistance
tive price. Every year the trustees must structure OSBA Health and executive search assistance. OSBA also offers professional
Insurance Trust offerings to compete with other carriers. If the development workshops for board members and school administra-
trust’s products are not the “best buy,” school districts, ESDs and tors at minimal cost.
community colleges are free to go elsewhere.
A state-controlled monopoly would eliminate the ability of How does the trust operate?
local carriers to offer cost-effective plans to local school boards, The OSBA Health Insurance Trust is governed by a ﬁve-mem-
ESDs and community colleges, which would deprive them of ber board appointed by the OSBA board of directors. The trustees
business. A mandated pool would be at the mercy of a very limited operate the trust independently from OSBA and have sole control
number of large insurance companies when it comes to rates and over the endorsement fee paid to OSBA. The trustees maintain poli-
plan options. cy control and authority over plan design and participation rules.
The members include a school district superintendent; a
What’s driving up the cost of health school district, ESD or community college business manager;
and three locally elected school district, ESD or community
insurance plans? college board members. (Trustee member organizations must be
All health insurance premiums – even those in large, well-run members of OSBA.)
pools such as the OSBA Health Insurance Trust – are being driven The trustees have voted to “buy down” premium rate increases
up by the following: from 2 to 5 percent annually. In 2002 the trustees provided the
• Aging employees using more health care largest premium relief in the history of the OSBA trust when it
• Skyrocketing costs of prescription drugs committed $10 million to a refund of premium costs paid directly
• Ever-increasing use of “high tech” medical procedures to participating school districts, ESDs and community colleges.
• An Oregon law that requires school districts to keep retirees in In 2003, the trustees restructured offerings to eliminate high-
the same plan as current employees. Based on 2005-06 OSBA cost options and create more effective and more economical op-
trust claims, the cost per retiree family was 39 percent higher tions. In 2007, the trustees realized the lowest increase in premium
than the cost per active employee family, although retirees pay rates since 1999. The 2007 overall rate increase for trust plans was
the same premium amount. 1.3 percent, compared to an 8 percent increase for PEBB, the state
None of these cost drivers would be alleviated by the proposed workers’ health insurance provider.
school employee health insurance pool.
Oregon School Boards Association
What are OSBA trust administrative costs?
Health Insurance Trustees for 2006-2007:
In 2006, the trust’s administrative costs were 7.6 percent. Ad-
ministrative costs were 7.8 percent for 2004-05. (Administrative Craig Prewitt, Chair, OSBA Health Insurance Trust
costs include an OSBA endorsement fee of 0.8 percent.) Committee; Board Member, Phoenix-Talent School District
Tom Bennett, Board Member, Coos Bay SD
What is the endorsement fee OSBA receives Jennifer Heiss, Business Manager, Creswell SD
from the insurance program? John Peterson, Board Member, Hillsboro SD
Endorsement fees for non-proﬁt and for-proﬁt associations Craig Roessler, Superintendent, Silver Falls SD
are common and help such organizations provide programs and
services. Twenty-nine of the 46 state school board associations
have some type of endorsed insurance program.
In 2003, the OSBA Health Insurance Trustees lowered the
endorsement fee that OSBA receives from the insurance program
from 1.025 percent to 0.8 percent of premiums paid to the trust.
The 0.8 percent will provide OSBA $2.5 million in 2006-07,
which is about 51 percent of the association’s revenue. OSBA
membership dues provide 14 percent of the association’s annual P.O. Box 1068, Salem, OR 97308
revenue. 1201 Court St. NE, Ste. 400, Salem, OR 97301
(503) 588-2800 or 800-578-6722