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Kitz keeps OUS health care costs high

1/14/2013: Nigel Jaquiss in WWeek:

In his report, Kenton says allowing OUS to find less expensive health insurance would have a real impact: In-state students pay $630 in tuition for every $1,000 OUS pays in employee health-insurance premiums. 

The system costs OUS more because its employees tend to be healthier than state employees as a whole. As a result, universities (and students through their tuition) subsidize the state’s health-insurance costs. 

It’s the first serious test of Kitzhaber’s commitment to giving universities more independence. But Kitzhaber believes if OUS employees got out of the state insurance pool, premiums for the remaining state employees could rise—creating long-term consequences that are bigger than higher tuition costs.


  1. Awesome0 01/15/2013

    In the long run, health care costs the more individuals realize them on the margin. Moral hazard drives increasing health care costs, especially given that doctors are rewarded in a fee for service way. Basically they get paid for every additional service causing them to over provide care, and we don’t get pay on the margin, so we over demand care. Net result…..too much care.

    The more we can switch to health plans that mitigate this by either allowing us to occur costs on the margin (but pay lower premiums) or pay doctors directly (rather than in fee for service) in managed care organizations would lead to decreased expenditures.

    • Anonymous 01/15/2013

      Moral hazard doesn’t work in this context from the patient side. Patients don’t have knowledge to decide what’s too much and what’s enough.

    • Awesome0 01/15/2013

      They purchase more than they would than if they bore the full cost of their choices. That might be good if there were positive externalities to treatment and we can actually trust doctors. The problem is doctors are paid and behave lock auto mechanics. If we had insurance so that we didn’t have to pay most of the cost of fixing our cars, we would get a lot more tune-ups. The same thing applies to health care.

  2. Anonymous 01/15/2013

    This attempt runs counter to every principle of Kitzhaber’s health care plan. Experience rating penalizes those with poor health. He wants to put everyone in the same pool, not break them out. He wants to apply the same coordinated care organization approach of “Cover Oregon” to all state and education employees.

  3. Anonymous 01/15/2013

    If OUS were treated as an autonomous public entity like OHSU (which does not participate in PEBB), it could be argued that it should have the choice to provide whatever coverage satisfies Oregon’s version of Obamacare (Cover Oregon), which is developing three tiers of plans for uncovered individuals to choose from. Maybe OUS should develop three tiers for the universities to choose from.

  4. Anonymous 01/16/2013

    The Register Guard reports that Kitzhaber wants to put all state employees into a Medicaid-like health plan. If that’s true, it’s a real deal-breaker for coming to Oregon as a faculty member — Medicaid? You gotta be kidding!

  5. Anonymous 01/16/2013

    He wants to put all public employees currently covered by PEBB under “coordinated care” like the three-tiered plans being developed by the State for those who aren’t covered by employer-provided plans.

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