Oregon shouldn't jump into proposed statewide insurance pool

DEAN KORTGE

STEVE DOTY



June 30, 2005



Our credentials: The Oregon Association of Insurance and Financial Advisors and the Oregon Association of Health Underwriters have more than 100 years of total experience in the group health-insurance business and provide services to a majority of the health-insurance purchasers throughout the state.



The Legislature is rightfully cautious about killing one 90,000-member statewide insurance pool, provided by the 35-year-old Oregon School Boards Association (OSBA) Insurance Trust, and replacing it with another pool without any history. In this Legislature, the old axiom "know where you will land before you jump" has come to the front and the SB 639A advocates don't like it.



There has been no actuarial analysis of the proposal to determine if there will be any savings. Furthermore, some advocates refuse to even consider conducting such a study.



A June 22 article in the Statesman-Journal ignores a June 21 Statesman-Journal article citing Sen. Avel Gordly's worries about the "lack of evidence of savings." Sen. Gordly, D- Portland, gave the subcommittee a "courtesy vote" for the bill because of some apparent pressure (not from Republicans) to move the bill.



Advocates of SB 639A claim that a couple of other states did a study and found that a mandatory statewide insurance pool might save money. But none of those states have moved forward to implement a statewide pool.



Besides, Oregon's health-insurance market is different, and studies from other states simply can't be applied here. The fact is that the SB 639A proposal just replaces one statewide pool with another and punishes the OSBA Insurance Trust for having done a good job with their pool's management.



Just four months ago, The Oregonian reported that the health insurance offered to school districts through the OSBA Trust was significantly less expensive than that offered to state employees through the Public Employees Benefit Board. The question needs to be asked: How will dollars be saved when the health-insurance pool the advocates of this bill would like to emulate is actually more expensive than what's currently available?



Insurance pools are great and in many cases we support them. The OSBA has operated a very successful insurance pool for 35 years. It has worked because it is subject to marketplace competition. Larger school districts can self-insure, and all districts can buy insurance from the private market if they can find a better deal. Competition melts away fat in any system. A state-controlled monopoly program will not.



The current structure has worked far better than any state-managed group (remember PERS), so why jump into it before you clearly know where you will land?