| PEBB 2009 Healthcare Rates |
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The Public Employees’ Benefit Board (PEBB) projects its overall health plan premium rates will increase by less than five percent[1] for 2009 – about half the increase for other large groups and one-fifth the increase for individual plans.
Review 2009 medical and dental plan premium rates by member group (employees, retirees, COBRA and self-pay).
How is PEBB able to keep its increase down?
The Board designs and purchases healthcare plans based on value for cost. The Board uses several levers to reach its goals: flexibility in plan design, the stability and size of its group, a focus on population health and health promotion, and the ability to affect the market and take on risk.
How does the design of PEBB health plans affect rate increases?
The Board customizes the design of plans in ways that encourage members and providers to choose treatments based on outcomes. One example is the design of PEBB’s prescription drug coverage. Members pay the lowest cost for generic drugs that are proven effective. They may choose brand-name drugs in the same class, but they pay more for the brand. When they choose a brand drug with a generic equivalent, they pay even more.
Doesn’t this shift cost to those who want the newest treatments?
This design applies to classes of drugs that have undergone valid comparative studies, conducted by groups at arms length from those that may have a stake in the results. The Board also requires its medical plans to have an exceptions process. A doctor can ask the plan for an exception when a patient has not had good results with the alternatives. Over time, comparative studies on outcomes of other treatments may influence plan design.
What benefits do stability and size bring to PEBB?
Because PEBB members have coverage as a benefit of their employment, they make up a very stable population base. Unlike people who buy individual plans, members of the PEBB group cannot opt into coverage only when they think they may need it and opt out when they don’t. Nor are they faced with dropping coverage because of changes in individual financial needs.
PEBB’s size helps moderate rate increases from large individual claims. While a portion of the PEBB group may experience a health catastrophe at any given time, most of the group will need little or no healthcare at that same time. Spreading risk across a large number moderates the effect of recent spikes in use on future rate increases.
How does PEBB’s focus on population health differ from other purchasers?
PEBB requires its medical plans to report aggregate data on the health of PEBB membership. The Board uses these reports to identify, design and implement programs that support prevention and management of chronic illness. These programs offer needed resources to the right individuals at the right time.
For example, data show that PEBB members with chronic conditions don’t always follow medication regimes prescribed by their providers. Cost may act as a barrier to compliance. Beginning next year, PEBB’s medical plans will fully cover the cost of certain generic medications typically prescribed for treatment of such chronic conditions as heart disease, diabetes and depression. Reports from the plans will help the Board monitor the impact and outcomes of the program.
How can the Board afford health promotion?
How can it afford not to promote health? Improvements in individual health improve the health status of the group as a whole, which help keep rate increases down.
Along with aggregate data from the plans, surveys by Public Health give the Board insight on health issues across the PEBB population. Through ongoing communications, members receive messages about healthy behaviors, and prevention of illness and injury. PEBB health plans offer opportunities to act on these messages. Examples include no-cost worksite health screenings to identify individual health risks, onsite flu vaccination clinics and a comprehensive tobacco cessation program.
How can the Board affect the market?
PEBB serves as a model and leader for other large healthcare purchasers in Oregon. It demonstrates how creative partnerships with medical plans can encourage changes in how they operate. Health plans are now piloting programs and testing models at PEBB’s urging. These include programs around decision support for members facing the question of surgery for back pain and regional tests of the medical-home and community-based care concepts. PEBB shares the outcomes of these efforts with other large purchasers, which guides them on decisions to support such innovations.
How does the Board’s ability to take on risk help keep rates down?
When an insurance company takes on risk, it generally sets premium rates to offset any possible loss, including potential loss to profit or other margin. At this time, the Board has sufficient reserves to be able to self-insure some risk. Thus, premiums don’t have to cover a carrier’s potential for marginal losses. This flexibility allows the Board to hold down rate increases, now and in the future.
[1] 4.83%
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