State officials: Employee health care growth rate ‘can’t continue’


DOVER — Per capita, only two states spent more on health care in 2014 than Delaware. This year, Delaware is spending $810 million on state employee health care and $760 million on Medicaid. Combined, that’s nearly 40 percent of the total state budget.

That leaves less money for vital areas like education, infrastructure and safety, and it means that unless health care costs can be controlled, tax hikes or service cuts will be coming.

To counteract that, officials are leading a charge to rein in expenses, with steps like creating rewards and punishments to incentivize some behaviors and discourage others among the thousands of people who work for the state.

“We can’t continue to grow at a rate faster than the state’s economy is growing,” Health and Social Services Secretary Kara Odom Walker said of health care costs.

She was one of the participants in a town hall event held by Gov. John Carney Thursday to highlight things the state is doing to stem the ride of increasing health care costs. About 40 state employees attended, with “a couple hundred more,” according to Gov. Carney, watching through an online livestream.

Health care costs are not a new issue.

In 2015, then Gov. Jack Markell proposed raising copays, prescription drug costs and deductibles to close a budget gap, but pushback from employees killed that plan. Officials ultimately made mostly minor increases to copays and prescription costs while also cutting coverage of erectile dysfunction drugs.

John Carney

One year later, Gov. Markell unveiled a plan to raise premiums and lock future state employees into a health savings account, but once again, the idea found little support, despite the governor’s office calling spending “unsustainable.”

Gov. Carney used that same word Thursday, emphasizing how much of the state’s budget is being eaten up by health care expenses.

“Those cost are growing at a rate two or three times the rate of our revenue growth,” he said.

It might be a different story if the First State was indeed first in health, but according to America’s Health Rankings, Delawareans are 31st in the nation in wellness rankings.

So, what are decision-makers trying to do?

Officials are hoping to encourage state employees to make fewer emergency room visits, get generic prescriptions, have lab work done at nonhospital-affiliated facilities and be knowledgeable about their care coverage. At the same time, they are also aiming to shift to a more outcome-based model that emphasizes efficiency and results.

“Let’s pay doctors if they’re doing a really good job of keeping people healthy,” Dr. Walker said.

Preventive care is also important, she said, using the example of the state buying fruit for someone at risk for diabetes (incurring a relatively small cost now) to prevent them developing the disorder (and preventing a larger cost down the road).

Earlier this month, Gov. Carney signed legislation instructing the Department of Health and Social Services to study health care and establish an annual “benchmark” the state can shoot to keep costs below.

Reforming the state’s health care system in this way is a long-term effort but one that has many benefits, the governor said.

“I’d much rather you put money in your paycheck than in your health benefit package,” he told the audience.

The event included a public question forum, giving several people opportunities to pose queries to the governor and health secretary. One man proposed stripping insurance from people who do not engage in preventive care like getting a flu shot, while another asked what Delaware is doing to lower hospital costs.

Attendee Gerald Mood said afterward he was impressed by the breadth of the state’s efforts to combat expenses, noting he feels preventive care is a worthy option to pursue.

According to the Office of Management and Budget, Delaware will have a $221 million deficit in employee health care in 2023 if nothing is done.

“I think the first step in this journey is you being interested,” Statewide Benefits and Insurance Coverage Director Brenda Lakeman told the assembled Delaware employees Thursday.

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