P O L IT IC A L
A C T IO N
Blue Cross “copies” BGBB plan
In the wake of a near $3-million loss
on its coverage of non-OPEU state
employes, Blue Cross is offering the
State Employes Benefit Board (SEBB)
an insurance plan that does not meet
SEBB bid specifications.
Instead, Blue Cross is offering the
State an insurance package that is
virtually identical in form—but with
lower actual benefits—to that design
ed by the Bargaining Unit Benefit
Board (BUBB).
Blue Cross is the only insurance
company to offer SEBB a bid.
In a letter accompanying its bid to
SEBB, Blue Cross said, “ By not
raising the benefit levels of the
program to meet the union plan
coverage (BUBB), the conclusion
In a letter accompanying its bid to
SEBB, Blue Cross said, “ By not
raising the benefit levels of the
program to meet the union plan
coverage (BUBB), the conclusion
was reached that during the year,
there could be movement of the
union employes remaining in the
SEBB Trust to the union program
(BUBB) in order to obtain the
additional benefits
“This action by Blue Cross is
testimony to the positive' impact
BUBB is having on insurance
coverage for state employes,” said
Cindy Parrish, BUBB insurance
administrator. "BUBB's leadership in
obtaining expanded coverage at
reduced costs has created a competi
tive environm ent fo r insurance
companies that can only continue to
benefit state employes, and the State,
in the future.”
Perhaps the most alarming aspect
of the Blue Cross bid is that retirees
will no longer be subsidized. Under
the Blue Cross plan, retirees will be
separated from active employes and
given a plan that offers reduced
coverage at up to a 158 percent
increase in rates.”
In addition, Medicare supplement
plan rates will go up by 59 percent or
more if SEBB accepts the Blue Cross
bid. However, Blue Cross has
provided SEBB with the option of
reducing these rates by spreading
them among active members.
“ Substantially raising rates and
lowering benefits is a real injustice to
retirees,” Parrish said. “ BUBB intends
to continue providing comprehensive
medical coverage at subsidized rates
for its retirees.”
Besides increased rates for retire
es, rates for other state employes will
also increase dramatically if SEBB
accepts the Blue Cross bid—20-35
percent for active state employes in
the SEBB program and 40-45 percent
for management employes.
Benefits that OPEU members
receive from BUBB that have been
particularly worrisome to Blue Cross
include:
• Basic dependent dental coverage;
• Well baby care (including examina
tions and immunizations);
• Paid second opinion before sur
gery is performed;
• Coverage of the first office call to
physician of subscriber's choice;
• Maximum coverage of $1-million;
• No monthly premium for full family
coverage; and
• BUBB's emphasis on doctor visits
and preventive medicine, rather than
hospitalization. ,
C om petitive developments be
tween insurers are of keen interest to
legislators, particularly those on the
Joint Ways and Means Committee.
Currently, consideration of budgets
for both SEBB and BUBB have been
shelved, along with other budgetary
matters, pending more accurate
projections of the State's biennial
finances.
BUBB, which was created in the
1979 legislature to provide state
employes with the opportunity to
create their own insurance plans, is
still in what many legislators consider
a trial period. This close scrutiny is
Chuck Mendenhall
due primarily to comparisons that are
being made between BUBB and
SEBB.
“The Blue Cross bid is a comple
ment to BUBB for developing a
comprehensive insurance package
for state employes," said Chuck
Mendenhall, BUBB chairman. “ It is
apparent that BUBB is meeting the
challenge offered It by the 1979
legislature."
OPEO asks for parity in PERS fund
Four pieces of legislation that are
designed to increase overall retire
ment benefits for public employes
have been drafted by OPEU and
United Seniors.
The legislation places emphasis on
helping retirees meet the increased
cost of living and to bring benefits for
those who retired before 1980 onto an
equal level with those who retired in
1980 or later.
The four pieces of legislation—S.B.
639, S.B. 843, S.B. 844, and S.B. 845
were introduced by Sen. Keith
Burbidge, D -M arion/P olk. These
measures will:
• Increase the permanent yearly two
percent cost of living adjustment
(COLA) to four percent;
• Require that the four percent COLA
be adjusted to the Portland Con
sumer Price Index;
• Increase retirement benefits by $2
per month for each year of public
service preceding retirement for
those who retired prior to Jan. 1,1968;
and
• Continue the present four percent
flat COLA for three months, to
provide time for transition to this new
benefits backage (an ad hoc four
percent COLA was passed in 1979).
If passed, subsequent legislatures
will have the option to review the
COLA provisions.
The centerpiece of th is new
legislation is S.B. 843 and S.B. 844.
These two measures are designed to
bring parity to members who retired
from similar positions with equal
years of service.
Under the present system, for
example, a university professor with
34 years of service, who retired in
1960, today receives a monthly PERS
retirement benefit of about $220. By
contrast, a professor who, with a
similar number of years service, and
retired in 1980, w ould receive
approximately $1,000 per month.
This disparity is primarily due to
increased salaries and benefits
retired members have received over
the years, especially when compared
to those members who retired prior to
1968.
The total increase in payroll
contribution heeded to implement
these increased benefits would be
only 0.16 percent, according to Eric
Parker, OPEU lobbyist for senior
affairs. "This substantial increase in
benefits at such a low (payroll
contribution) increase is possible
because of the recent increased
earnings of the PERS fund."
Parking legislation
at critical juncture
State employes should be paying
parking fees that will bring a profit for
the parking that each state agency
provides, according to Darrell Ralls,
director of the Department of General
Services.
OPEU Government Relations di
rector Chuck Mendenhall countered
Ralls’ position, before the House
State and Federal Affairs Committee,
with amendments to S.B. 136 that
would prohibit establishing fees
based on market rates and would
require that fees be set according to
actual cost to each agency.
Mendenhall said that the parking
issue is at a critical juncture.
“ Now is probably the last chance
state employes will have to give their
input in helping shape this legisla
tion,” he said. “ If we get the same
immediate and widespread turnout
with letters that we got during
General Services’ public hearings, we
should get what we have been
working so hard to attain.”
Mendenhall said that a short letter /
or postcard will do. He made the
following suggestions for writing to
members of the House:
• Specifically mention S.B. 136 along
with your feelings that parking not be
based on market conditions and that
they only reflect actual cost to each
agency;
• Do not use a threatening tone;
• Expressyourselfsimplyandinyour
own words; and
• Do not, under any circumstances,
use state m aterials or tim e in
preparing your correspondence.
Address your letter or post card to:
The Honorable _ _ _ _ _ _ _
State Representative
State Capitol Building
Salem, Oregon 97310
Mendenhall said that it is important
that all House members be reached,
“ but members of the State and
Federal Affairs Committee are critical
right now.”
Members of the House State and
Federal Affairs Committee are Drew
Davis, Chairperson, D-Multnomah;
Larry Campbell, Vice-Chairperson,
R-Douglas/Lane; Robert Harper, R-
Umatilla; Grattan Kerans, D-Lane;
Caroline Magruder, D-ColumbiaA
Washington; Glen Otto, D-Multno-
mah; and Donna Zajonc, R-Marion.
In the third quarter of 1980, the
annual rate of return on retirement
fund investments were 12.3 percent.
The guaranteed rate of return on
these accounts is 7.5 percent. As a
result, members’ accounts w ill
receive increased earnings and the
employing agencies will be assessed
reduced payroll rates.
Currently these bills have been sent
to the Joint Ways and Means
Committee, but have not been
assigned to a subcommittee.
“We feel there will be broad-based
support for these bills from PERS
members," said Parker. "However, it
is very important that members who
approve of these pieces of legislation
contact their senators and represen
tatives in writing.”
Parker said that senators who are
particularly critical to passage of this
legislation are Ted Kulongoski, D-
Douglas/Lane; William McCoy, D-
Multnomah; Clifford Trow, D- Ben-
ton/Polk; George Winguard, R-Lane;
John Kitzhaber, D-Douglas/Jose-
phine and Ruth McFarlin, D-Multno-
mah.
A fifth piece of legislation that
pertains to PERS retirement benefits
—S.B. 148—would provide most
retirees with a higher final average
salary upon which retirement benefits
are determined.
. Presently, the cut-off date for
determining a retiree’s final average
salary is Dec. 31 of the last full
calendar year worked. For many
retirees, this means the loss of up to
11 months, of what is normally their
highest salary level, when their
average salary level is computed.
In addition, many managers in the
state point out that this forces an
abnormal retirement pattern, since
many state workers wait until Dec. 31
to retire.
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