January was the first positive month in awhile for Delaware’s Group Health Insurance Plan, coming in under budget by around $5 million, but the fund is still expected to go negative by the end of next month.
Consultants are recommending a 27% premium increase for next fiscal year to address the FY24 predicted $41 million shortfall, as well as future increases in health care costs.
SEBC Co-Chair and Secretary of Human Resources Claire DeMatteis says it’s important to put these premium hikes into context, explaining monthly employee contributions would only increase by a range of $9 to $87 depending which of the four plans offered the employee is on.
“If we don’t increase the health care premium rates, the General Assembly is looking at having to find $232 million – $232 million to add to the FY25 budget. The state doesn’t have that money," she says.
De Matteis adds in the past two years, the average state employee salary has increased anywhere from around $6,600 to $7,500, while insurance premiums have remained the same.
Here's a breakdown of an across the board 27% premium increase the four non-Medicare health insurance plans offered by the state:
| FY24 Monthly Employee Contribution | FY25 Monthly Employee Contribution | |
| First State Basic | $33.06 | $41.98 |
| CDH Gold | $42.78 | $54.32 |
| Aetna HMO | $56.30 | $71.24 |
| Comprehensive PPO | $125.04 | $158.76 |
This table only shows employee costs — it does not include employee + spouse, employee + child or a family plan.
Under an across the board 27% premium increase, for the 35% of Medicare retirees who pay a monthly premium on Medicfill with Rx, DeMatteis says they would only pay an additional $78 per year.
The state share contribution would increase in FY25 by a range of $214 to $577 per month per enrollee.
"I think we've developed a better way to communicate this to state employees in terms of reminding them that they pay, depending on the plan they pick, just 4% to 13.25% of their healthcare premium, and that is extremely generous," DeMatteis says.
Delaware is unique in that its employee share contribution percentages are written into the state code, meaning it would take legislative action to change those percentages.
The current employee share percentages for health insurance premiums are: First State Basic: 4%, CDH Gold: 5%, Aetna HMO: 6.5% and Comprehensive PPO: 13.25%.
While increasing the employee share percentage requires legislative action, increasing the overall premium rate only requires a vote from the SEBC.
Aside from a 27% across the board increase, Willis Towers Watson consultant Brian Stitzel presented the SEBC with four additional plan change scenarios to consider.
Re-align rates based on Actuarial Value (AV)
Stitzel explains AV represents the overall comprehensiveness of a plan — the higher the AV (or the "richer" the plan), the more that the plan pays versus what the participant pays in deductibles, copays, out-of-pockets, etc.
The current plan design values for the non-Medicare plans are as follows: First State Basic AV=91.6%, Comprehensive PPO AV=96.1%, Aetna HMO AV=96.5% and CDH Gold AV=97.8%.
Stitzel notes all four of the plans are extremely rich with little variation between the four, and the state may want to look into "creating a more meaningful differentiation between plan options."
"The way that the employee shares have been legislated... it's actually skewed where people are paying a higher percentage of a plan that has a lower value," Stitzel says.
He's referring to the CDH Gold and HMO plan's being richer than the PPO, but employees pay significantly less for those two options.
Over 65% of state employees enrolled in one of the four plans are enrolled in the Comprehensive PPO plan.
Stitzel says instead of a 27% premium increase across the board, the SEBC could look into having the gross premium rates being reset based on their current AV. This would lead to varying increases by plan options and would still create the same aggregate 27% needed increase in premiums.
Under this scenario, the PPO premium would increase by 23% and the CDH Gold premium would increase around 39%.
Stitzel and DeMatteis both note individuals in the PPO Plan could move to the CDH Gold or HMO with little to no change in plan value and have lower premium contributions.
Summary:
- Employee contributions increase in FY25 by a range of $11 to $75 per month
- State share contributions increase in FY25 by a range of $271 to $771 per month per enrollee
Re-align rates on AVs and equalize state subsidy
This scenario is similar to the above, except the state contribution would be the same regardless of which plan option the employee chooses.
In order to do this, legislative action would be required to modify the current employee share percentages.
Summary:
- Employee contributions increase in FY25 by a range of $4 to $272 per month
- State share contributions increase in FY25 by a range of $215 to $628 per month per enrollee
Unchanged employee shares and AVs adjust to equalize state share
This plan would keep the respective employee premium share of 4%, 5%, 6.5% and 13.25%, and would instead modify the AVs to keep the state share the same across all four plans.
This would decrease the AV of First State Basic, CDH Gold and Aetna HMO, but would increase the PPO AV from 96.1% to 98.6%, making the plan richer. It would not require legislative action.
Summary:
- Employee contributions increase in FY25 by a range of $10 to $377 per month
- State share contributions increase in FY25 by a range of $215 to $628 per month per enrollee
Meaningful spread from low to high and equalize state subsidy
Stitizel notes this scenario would be for future consideration, perhaps over 2-3 years, to provide more "meaningful choice in plan variation" because of how close all of the four plan's AVs are.
"If you go back to the Actuarial Values, you can see they're very close to one another, bunched together. Outside of the First State Basic, they're basically on top of one another," Stitzel says.
This would reduce the First State Basic AV from 91.6% to 80%, but it would have a $0 employee premium contribution.
The four plan's AVs would all be separated by 5%, with the Comprehensive PPO being the highest at 95%.
Summary:
- Employee contributions could decrease by up to $85 in FY25 or increase by up to $95 per month
- State share contributions increase in FY25 by a range of $178 to $471 per month per enrollee
The SEBC holds another meeting to discuss the scenarios on March 11 and will vote on a final decision on March 25.
Weight loss medication coverage
The SEBC continues to consider changing coverage options for weight loss medications after paying millions more than expected this year.
Health Policy and Planning Subcommittee Chair Faith Rentz says they may not have enough time to make any changes before the start of the next enrollment period.
“My instincts are telling me it may be a bit premature to suggest trying to implement any plan design changes by March 25, which we would need to do in order to be ready to implement those as early as July 1," she explains.
Rentz says it’s not likely changes to weight loss medication coverage would warrant a re-enrollment period, so the committee could decide to make changes during the plan year.
SEBC committee members State Treasurer Colleen Davis and Supreme Court Chief Justice Collins J. Seitz both agreed the state needs to look into changes sooner rather than later.
