Christine Jordan Sexton
Lawmakers appear poised to revamp the health insurance program used by tens of thousands of state employees — as well as legislators and other top state officials — by including in their budget plans to competitively bid the state’s $3.1 billion program and have new contracts inked and in place for coverage in two years.
Neither chamber is proposing any changes to the state group health insurance plans for the next benefit year starting Jan. 1. Employee premiums would remain at their current levels. But included in the House and Senate budget documents released late Friday are directives for the Department of Management Services (DMS) to begin the process of selecting a contractor to administer HMO and pharmacy benefit manager services for 2024.
The House has included the directive in its proposed spending plan for Fiscal Year 2022-23 and authorizes the department to begin working on the procurement immediately. The House also earmarked nearly $3 million for what it hopes are cost-saving initiatives. It has earmarked $2.1 million, $900,000 of which is recurring, for a cloud-based data analytics solution for fraud and abuse and $600,000 for a cost-benefit analysis.
The Senate has included a revamp in its proposed bill (SB 2502) also known as the implementing bill for the budget. Both chambers also have released conforming bills that ratify DMS rules that establish nine “regions” across the state. DMS was directed to establish the regions in 2019 as part of an eleventh-hour effort by the House to revamp the state health insurance plan.
While both conforming bills ratify the DMS rules, the House bill also requires DMS to establish anti-fraud units. The House conforming bill (PCB APC 22-05) would allow certain state employees who leave their jobs on or after July 1, 2022, to enroll in the state group plan within two years after their departure.
Only employees who worked at least six years for the state and were enrolled in the state group plan at their departure could qualify. Part-time employees would not be eligible, nor would those employed by the state university system.
The House bill also eliminates a failed attempt to revamp the state health insurance program that was long championed by the House and passed in 2017. The law directed DMS to offer state employees access to one of four health insurance plans — named after metals with different actuarial values. Employees who chose less expensive plans than what the state paid to the premium could be used to increase their salary. An actuarial analysis shows that the law, if implemented, could increase costs by $525 million annually. Lawmakers have agreed to hold the law in abeyance. The House bill would strike the ill-conceived program from the books.
That provision is not in SPB 2506, the Senate confirming bill to ratify the DMS rules.
The move to competitively bid the $3.1 billion program comes as economists revised the fiscal outlook for the state employee health insurance trust fund. The fund, a combination of employees’ monthly premiums and state tax dollars, is projected to have a $61.8 million deficit in Fiscal Year 2023-24. The deficit is due to a decline in health plan enrollment in Fiscal Year 2021-22 and higher than anticipated expenses for those covered. Data shows 3,312 fewer state employees in the health plan in the current fiscal year than projected.
