The state employee health insurance account continues to hold off its expected cash shortfall, but additional premium hikes are still likely.
While the state’s health insurance plan balance — known as the Group Health Insurance Plan (GHIP) — was initially expected to go in the red as early as January this year, the inevitable deficit will likely take effect in June.
“It looks like we’re still in the black — probably won’t hit deficit now until next month, and as I understand it, the projection is that the GHIP will end the fiscal year at a deficit of $8 million," Delaware Department of Human Resources Secretary Claire DeMatteis said at the State Employee Benefits Committee's (SEBC) May meeting on Tuesday.
Although the $8 million deficit is far from the projected $2.4 million surplus the GHIP was expected to sustain for fiscal year 24, future premium hikes may be slightly lower than previously forecasted.
The SEBC already committed to raising state employee health insurance premiums by 27% for FY25 — starting July 1, 2024 — but Willis Towers Watson consultant Brian Stitzel is now recommending no increase in FY26 and a 5% increase in FY27 and FY28.
In March, Stitzel had expected FY27 and FY28 premium hikes to be 1.2% and 3.1% higher respectively.
Stitzel also presented the SEBC with recommended trend updates for the state insurance plan.
Predicted trends combine expected utilization rates of the GHIP as well as cost increases and healthcare inflation.
Stitzel explains as prescription drug costs and usage continue to rise, the state should expect to spend more on medications in the coming years.
“We’re recommending an increase from the 9% trend assumption up to 10% for both the commercial pharmacy population and the EGWP, mostly due to what we’ve been seeing over the last couple of years, coupled with the fact that the plan covers the GLP-1 drugs," he said.
EGWP — employer group waiver plan — refers to state Medicare retirees and GLP-1 drugs are the increasingly popular weight loss medications like Ozempic.
Initial predictions had the state paying around $2 million total this fiscal year to cover weight loss drugs — instead, it’s paying an average of $2.5 million per month.
Another Willis Towers Watson consultant noted bariatric (weight-loss) surgeries, joint replacements and orthopedic surgeries accounted for almost 80% of the state's SurgeryPlus program spend.
Stitzel also recommends medical claim trends increase from 3% to 5% for Medicare retirees for the next four years.
The recommended trend assumptions will add approximately $6 million in costs to the FY25 state health insurance plan forecast, growing to $30 million by FY28.
