Monday, May 21, 2012

PEBB Has State Employees Paying More than Double for Their Own Incentives; HEM Requirements Likely to Balloon

Last month Dennis Thompson Jr. reported that the Oregon State Public Employment Benefits Bureau (PEBB) was set to raise health cost rates for state employees a projected $4.03 to $5.52 a month (depending on plan) "despite a $42 million [maybe $46 million--see below] projected surplus". Thompson noted:
"It’s hard to say whether the increase in premium contributions will matter to workers. After all, the cost difference between this year and next amounts to one cheap Subway footlong a month for PEBB Statewide members, and a cup or two of Beanery coffee a month for Kaiser members."
Still Public employee rate payers wondered why rates were going up if there was such a big surplus--which if divided up among the 80,000 state employees would amount to more than $43/month in health payment savings for each employee. That's quite a bit more than a Subway footlong or a cup of coffee or two a month. Actually, it amounts to a good chunk of what they are now paying monthly: $50-$70/month depending on plan coverage.

Ingrid Noberg, spokeswoman of PEBB, responded by saying the $41.9 million was projected as savings that "could accumulate" in 2012 not "dollars in hand" and, anyway, premiums are based on the overall health cost "trend" not savings.
"Projections of premium rate increases are based on trend, which tries to account for all variables. Trend for PEBB continues to rise, although Board decisions have mitigated some cost increases. PEBB trend overall appears to be about 4.5%, which is below what is currently budgeted and looks to be at or below overall market projections."
Reporter Johnson further explained that PEBB pays out about $10 million a week in medical (which doesn't include dental) claims, and so a $42 million surplus would only be "a four-week cushion for a 52-week health plan."

But, wait. That $41.9 million rather insignificant surplus is now going to fund the $12.6 million needed to pay a $17.50 per month "incentive" to the 60,000 (75% of) state employees currently signed up for PEBB's Health Engagement Model (HEM).
"The cash incentive would cost PEBB about $12.6 million under current HEM participation levels. About 60,000 people, or 75 percent of those covered by PEBB, are participating in the wellness plan this year, Loretz said.

"PEBB will draw the money to pay for the incentive from a projected $46 million [see above] surplus in the stabilization fund that it must maintain as a self-insured health plan."
Apparently Dennis Johnson failed to connect the information in these articles. How could a third ($12.6 million) of a supposedly insignificant savings of $42 [46?] million easily pay a $17.50/month incentive to 60,000 state employees, but not even more easily cover the $5/month increase for 80,000? ($12.6 million pencils out to over $13/month for each of the 80,000 employees.)

And if these are "projected" rather than "cash in hand" savings, how can policy be adopted to spend those funds?

Noberg seems to have done a good job of spinning information to Dennis Thompson Jr. It looks like PEBB is (wink, wink) giving state employees their HEM participation $17.50/month "incentive" from an extra $4-$5/month new charge to them and not refunding a cent of the $43+/month in savings expected to be gained this year. Receipt of $17.50/month for payment of $47+/month sounds like a reversal of the old "buy low, sell high" investment advice.

Then there are the upcoming Health Engagement Model demands. In 2012 HEM requirements to avoid a $20/month ($35/month for couples) fine have been fairly easy: complete a health questionnaire and two online lessons. Though there have been some problems with the questionnaire being a bit too intrusive, participants were assured they would not be pressured.
"Q: Do I have to lose weight, quit tobacco or meet any other goal?
"The only expectation is that members follow through on their commitment to take the assessment and education steps. No one will be held accountable for a measure of success – just for taking the these steps."
Requirements for participants in HEM may radically increase in 2013. Here are ideas for the 2013 follow up:
"• Blood pressure, blood glucose and cholesterol tests.

"• Required participation in weight management or smoking cessation programs for employees who are overweight or using tobacco.

"• Participation in a health screening program or a physical activity challenge."
[emphasis added]
Poor state employees. They are PEBB's own little social sample to form and reform at will. They really do need a union to protect them--a better union and better protection than they have now.

UPDATE: Credit where it is due. SEIU reports:
"In June, PEBB will discuss whether or not to increase the HEM requirements in 2013. Through our committee, we have been clear: PEBB should not increase HEM requirements in 2013."


MAX Redline said...

That's pretty kinky PEBB-math. Still, they don't need a better union - in my view, there's no such thing as a good union.

T. D. said...

Max, in any case, state workers sure need help to stand up to PEBB. Labor representatives (both on and off the board) haven't done such a good job. You may have noted that on the latest vote, three labor representatives still voted against it because of the financial penalty of $100 more in deductible for non-participants. But, apparently no one thought the financial wheeling and dealing was out of line.