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School officials question health proposal

SALEM ' Officials with Jackson County's two largest school districts, including one that could be a poster child for the crisis in health insurance costs, are skeptical about a proposal for a mandatory statewide health insurance pool for all school districts.

The controversial measure ' Senate Bill 107 ' is sponsored by Gov. Ted Kulongoski. Its aim is to rein in soaring insurance rates by spreading the risk while eliminating many fixed costs paid by individual districts seeking coverage. A similar measure failed in the 2003 Legislature.

Pushing hard for the governor's proposal is the Oregon Education Association. The most active opponent is the Oregon School Boards Association, which runs its own profitable health insurance program. A statewide pool would force the OSBA trust out of business.

OEA, which represents teachers primarily, says a state pool would save money by spreading the risk over a larger group of people, reduce fixed costs such as administration and broker commissions and slow the trend in cost shifts to employees through higher deductibles.

Bill Feusahrens, superintendent of the Eagle Point school district, says costs for coverage have soared. Premiums now range from &

36;693 to &

36;936 per employee, depending on the deductible.

— That is sky-high, no question about it, says Feusahrens. Eagle Point officials have been working with OEA to come up with a better policy at the least possible cost.

Feusahrens said Friday the district will be reviewing three proposals for new coverage. We hope to have an answer next week, he said. The superintendent wants to put all district personnel under one plan, a move he believes will be less expensive.

Currently, OEA's program covers teachers and classifieds while OSBA handles coverage for administrators and confidential employees.

Asked if he supports the governor's proposal for a statewide pool, Feusahrens qualifies his response: I will gladly support any approach that will lower our rates, but I am not persuaded Senate Bill 107 will be a cost-saving measure.

He said, however, that he plans to keep an open mind.

contrast, the Medford school district's decision to self-insure appears to be paying off, according to Galen Anderson, director of business and facilities for the county's largest district.

We have locked into an excellent program. We're getting some good results, Anderson said.

Medford offers medical, dental and vision at very little out-of-pocket costs for our employees, Anderson said. Teachers have voluntarily agreed to a &

36;50 co-pay for coverage.

Our employees use the program wisely because they have a sense of ownership, Anderson said. The district's carrier is Blue Cross/Blue Shield.

After the first year's experience, rates rose less than — percent. They climbed slightly higher the second year and are expected to increase 5 percent next year, but will remain well below most other districts.

Anderson is well aware of the risks associated with self-insuring. You never know what's out there for the next year. But with our employees' help, we have been able to keep costs down, he said.

Medford is one of only five K-12 districts that self-insure. The others are Ashland, Crook County, North Clackamas and Portland. As for the governor's proposal, Anderson had this observation: If they leave us alone, we'll be fine.

No hearings have been scheduled on SB107, but the battle behind the scenes has been intense, particularly between the teachers' union and the board members' association.

Chip Terhune is government relations manager for OEA. This is not a panacea, Terhune says of a statewide pool. We have to be realistic about that.

He does believe it will slow the rate of premium increases by spreading the risk, and that will reduce or even eliminate fixed costs.

John Marshall, legislative director for OSBA, has a different take on the governor's effort to create a statewide insurance pool for schools. He believes it will cost districts more money.

The real cost drivers behind skyrocketing health costs are not addressed in this proposal, he said. For example, rising hospital and doctors' fees, expensive high-tech medical procedures, prescription drug costs and aging employees.

Marshall also was critical that the board that would be appointed to administer the plan would be dominated by the unions. The majority will be beneficiaries of health benefits that are going to be provided, and that to us is the PERS public employee retirement fiasco all over again, he said.

The unions will push for more and more benefits at a cost to the general fund, and that means those dollars are going to come out of K-12 funding, he said.

OSBA operates a highly successful insurance trust that brokers policies for school districts. Revenue from an endorsement fee and an 8/10ths of — percent of premium fee for its sponsorship covers roughly 60 percent of OSBA's operating costs.

Don Jepsen is a free-lance writer living in Salem.