Gov. Jack Markell’s (D) proposed changes to state worker health benefits are getting pummeled by lawmakers in early budget hearings.
Markell is trying to head off a projected $484 million deficit by 2022 by introducing a new “Health Savings Account” plan for employees hired after Jan. 1, 2017.
That locks them out of high-cost existing plans with rich benefits, instead making them pay $1,000 toward their deductible if they’re single or $2,000 for families.
Sen. Harris McDowell (D-Wilmington North), who served on a recent task force to study the issue, says the proposal is misplaced.
“What I believe we learned is that we’re outgunned by the hospital profession and the pharmaceutical profession,” McDowell said.
Because Delaware insures itself rather than entering into a risk pool managed by another insurance company, it absorbs any overages if the cost of claims outpaces its fund.
McDowell says the state is getting fleeced because they don’t have the staff to properly negotiate realistic rates with hospitals and pharmacies.
“They’re not charging us what they believe is the correct bill. They’re charging us what they believe they can get us to pay.”
McDowell peppered state budge director Ann Visalli with questions Tuesday about shifting the governor’s approach.
She says her office already negotiated $31 million in savings in how much it pays for prescription drugs and is trying to make the cost of healthcare more transparent for public workers.
Calling the yet-to-be finalized initiative a “Carfax version of shopping for healthcare,” Visalli says it will drive patients toward the most affordable options.
In the meantime, a $33 million hike in premiums – mostly borne by the state – is needed to cover day-to-day expenses, she says.
“These are the minimal necessary changes to keep the health plan balanced,” said Visalli, noting that the new HSA will help replenish a $71 million reserve account that was depleted last year while saving even more money in the coming years.
That increase in monthly premium costs nearly negates Markell’s proposed one percent raise for those insuring their families who make under $50,000 a year.
“I think there needs to be a message here that they are not getting a [pay increase],” said Rep. Joe Miro (R-Pike Creek Valley). “On one hand, we give a salary increase and on the other hand, we take it away.”
McDowell says he will continue looking at ways to modify the governor’s healthcare proposal as JFC crafts next year’s budget over the coming months.
