Delaware’s State Employee Benefits Commission may raise employee health insurance premiums to close a growing gap between revenues and the cost of insurance claims.
As the number of retired state employees surges, Delaware’s healthcare costs are skyrocketing. Retirees generally cost more to insure, and the state projects a roughly $25 million discrepancy between premium revenues and claims by the end of this fiscal year.
To close that gap, the Commission could raise premiums for active employees by more than 16 percent this year; alternately, the Commission could raise them about 9 percent each of the next three years. Employee health insurance premiums remained unchanged for a half-decade until last year, when they jumped more than 8 percent.
Chris Giovanello, a consultant with the firm Willis Towers Watson, says the hefty increase is needed to close the gap between the state’s premium revenues and rising insurance claims.
“We’re not looking at double-digit rate increases long term," he said. "We’re in a scenario where we need to get revenues in line with the claim projections. And this comes back to not having touched premium rates for about five years.”
The Commission also wants to avoid new costs, including by resisting calls to cover new weight loss medications. But Insurance Commissioner Trinidad Navarro argues that could reduce future claims by enabling employees to deal with health issues before they escalate.
“At a time when we’re trying to cut costs, it may not seem appropriate," he said during this week's Commission meeting. "But for the people who have used these medications, they have seen their cholesterol come down, their high blood pressure come down, their diabetes come down.”
The Commission’s efforts to manage rising costs have drawn increasing attention after last year’s fight over plans to transition thousands of retired state employees to a Medicare Advantage Plan to mitigate the state's $10 billion unfunded liability for retiree healthcare.
Meanwhile, the state also faces the end of pandemic-era federal reimbursements for COVID testing and treatment costs, adding more strain to the state’s employee health insurance program.
