Study finds continuing need for benefit reform
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Published: 09-Sep-2010

CapitolBeatOK Staff Report

Published: 09-Sep-2010

A review of state employee benefit systems today indicated that combining some administrative functions of the Employees Benefit Council (EBC) and the Oklahoma State Education and Employees Group Insurance Board (OSEEGIB) could still save money while maintaining state employee benefits.

However, a legislator working on the issue says the new federal health care law will complicate reform efforts and make it difficult to generate greater savings or improvements to state employee benefits.

“Today’s meeting reaffirmed that we have the opportunity to save money by eliminating needless duplication in state employee benefit agencies,” said state Rep. Jason Murphey, a Guthrie Republican who chairs the Joint Liaison Committee on State and Education Employees Group Insurance Benefits. “The reforms House Republicans have proposed would clearly address rate increases while also creating a more open and accountable system.”

“Today’s meeting and past studies indicate that this reform is an opportunity to save significant taxpayer dollars while maintaining competitive benefits for state employees,” said House Speaker-designate Kris Steele, a Shawnee Republican.

During today’s committee meeting, lawmakers heard from officials with OSEEGIB and the EBC who gave an overview of each agency and discussed rates and incentive programs.

Officials noted that potential future changes to state employee benefit plans could result in the loss of “grandfather” status and cause state plans to be subject to the new federal health care law. The new law’s mandates could ultimately increase rates by double-digits, Murphey contends.

“State employees in an HMO could pay the price for the absurd consequences of the federal government’s once-size-fits-all approach to health care,” Murphey said. “That is unfortunate, because the federal law ties our hands as policymakers and makes it difficult to tailor state benefits to the needs of our employees in a cost-effective manner.”

In spite of the federal law, however, Murphey said there is still opportunity for lawmakers to find cost-savings by reducing administrative duplication.

During the last legislative session, lawmakers approved Senate Bill 2052, which would have consolidated OSEEGIB and the EBC into one entity called the Oklahoma Health and Wellness Board.

The legislation would have required a competitive and winner-take-all bidding process for a statewide HMO for state employees, in addition to current PPO insurance offerings. This change would have worked to lower the cost of an HMO plan for state employees through volume purchasing and decreased administrative costs, and would have in turn brought the state employee benefit allowance more in line with actual health insurance costs.

The bill was based on recommendations made in a report by Milliman Inc. to the Oklahoma State Employee Health Insurance Review Working Group, which met during the 2009 legislative interim.

Gov. Brad Henry vetoed the bill, sparking criticism from legislators. Some state agencies predicted the measure would result in significant savings, and Commissioner of Insurance Kim Holland, a Democrat like Henry, had supported the measure and criticized the veto.

Rep. Murphey, in his release sent to CapitolBeatOK, asserted that during today’s meeting, it became clear that OSEEGIB and EBC officials could better work together in a way that provides savings that would have occurred if Senate Bill 2052 became law.

House lawmakers plan to introduce similar reforms in the coming legislative session.

NOTE: Editor Pat McGuigan contributed to this report.

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