Possible premium hikes on horizon for state workers

DOVER — Delaware government employees might have to pay a little more for their health care in a few months. The State Employee Benefits Committee is considering raising premiums for tens of thousands of state workers and their families, although nothing has been decided yet.

At the SEBC’s monthly meeting Monday, members laid out three options that could be voted on when the group convenes again June 10: doing nothing, increasing premiums 1 percent or hiking premiums 2 percent.

“It’ll be contingent on the outcome of the budget process as we move forward,” Office of Management and Budget Director Mike Jackson said afterward.

A 2 percent increase would see employees owe between $6.72 and $65.52 more, depending on the plan, while the state would pay anywhere from $160.20 to $428.76 more per employee. Should a 1 percent hike be approved, the added costs would total half of what they would be under the 2 percent plan.

Additional clarity will be offered later this month when the Joint Finance Committee begins meeting to mark up the budget. The 12 lawmakers on the body will convene May 20 and spend two weeks delving into the spending plan, including health care.

JFC may opt to provide some money to stabilize the Group Health Insurance Program reserves, which could allow workers to avoid higher premiums.

The reserve account is projected to have a surplus of $60.1 million when the current fiscal year concludes on June 30, but absent any changes, it’ll quickly be eroded, according to state officials. At the end of the next fiscal year, in 2020, the account’s surplus is projected to be $35.6 million.

One year later, it would be down even more, with a shortfall of $33.7 million.

At an SEBC subcommittee meeting last week, attendees seemed in agreement that a premium increase is the best choice in the long term.

“Any time the state sort of puts off minimal increases because of the financial situation, the problem just compounds and gets worse,” Department of Health and Social Services Deputy Secretary Molly Magarik said.

According to projections, premium increases of more than 6 percent will be needed in two years if nothing is done before then.

State employee health care costs have been a thorn in decision-makers’ sides for several years due to skyrocketing costs, prompting consternation among both the executive and legislative branches, to say nothing of state employees themselves.

The Group Health Insurance Program is projected to total $856.2 million for the fiscal year that begins July 1 and concludes June 30, 2020. The governor’s recommended budget for that same year, for comparison, is approximately $4.47 billion.

Attempts have been made to rein in growth, with officials in January setting a “benchmark” they hope to keep total health care cost growth under. For 2019, that target is 3.8 percent.

In February, the SEBC voted to increase copays for certain services under some plans as part of an effort to encourage employees to utilize cheaper care. As a result, medical imaging services like MRIs and X-rays now cost more at facilities based in hospitals, while outpatient laboratory work at non-preferred labs and emergency room visits require state employees to pay more out of pocket.

As a trade-off, however, copays for urgent care centers and preferred outpatient labs remain low or, in the case of freestanding imaging facilities, nonexistent. Telemedicine copays were also eliminated by the committee earlier this year.

More drastic health care changes proposed in 2015 by then Gov. Jack Markell were rejected due to outcry from state workers.

Treasurer Colleen Davis noted at a subcommittee meeting last week premiums are still “substantially less” for state employees than those in the private sector.

Mr. Jackson, who is tasked with carrying out Gov. John Carney’s financial vision in regard to the state spending plan, would not say Monday which premium option the executive branch prefers. He did, however, emphasize the administration hopes both to continue investing in state workers and to obtain greater stability in budgeting.

The latter point would seem to be a harbinger of premium increases unless JFC sets aside money.

“At this point, we’re looking at you could smooth (the Group Health Insurance Program projected deficit) out over time or you could do nothing and, rather than a 2 percent increase over the next two years, it could be a 4 percent in one year,” Mr. Jackson said.

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