Public Employees Retirement System


About Us > History

PERS has been a plan sponsor of retiree health plans since the late 1950s. Health insurance was a new concept at the time, and PERS offered a simple hospital indemnity plan which paid a hospitalized patient about $15 a day. During the next 20 years the benefits were improved and a basic plan was added to cover out-of-hospital expenses. The cost of the plans was fully paid by participants from the day the health plans were added.

When Medicare was introduced to the American public in the mid-60s, the health care industry mushroomed and PERS moved to keep pace with the need for good health plans to supplement this new federal health plan.

In the early 70s, PERS added a Medicare supplement plan. From its inception until July 1988, PERS plans were fully paid by participants. There was no contribution from PERS. In July 1988 legislation was implemented to provide a subsidy payment from the PERS system toward a Medicare supplement for PERS retirees who retired with eight or more years of service and enrolled in a PERS-sponsored plan. This subsidy is called the Retirement Health Insurance Account (RHIA) and is funded by assessment to all PERS employers.

With the advent of this new subsidy, PERS sought competitive bids for the health plans as well as for administrative services. PERS planned a strategy to offer an open enrollment opportunity for PERS retirees not enrolled in the program. The agency also added a case management and drug utilization review program at this time, meeting the statutory requirements of offering plans with cost-containment features.

In 1991, legislation was passed to provide a subsidy for state retirees under age 65. Implemented in 1993 and administered by PERS Health Insurance Program (PHIP), this subsidy was called the Retiree Health Insurance Premium Account (RHIPA) and is funded by an assessment against the state of Oregon only. A dental plan added in 1992 offered very reasonable rates, but steep rate increases were necessary for the first two renewals. Kaiser Dental was added as an option for 1993.

Another open-enrollment session was held in 1994 to correct adverse selection among the plans, decreasing membership in Medicare plans, and escalation of prescription drug costs which were reduced by nearly 30 percent. In 2006, with the implementation of Medicare Part D prescription coverage, PHIP once again opened up enrollment to all eligible retirees.

The health care program at PHIP is staffed by five employees who oversee the needs of 59,000 health-plan members.