The body in charge of the state health insurance plan voted for across the board trend assumption increases to account for rising healthcare costs.
The State Employee Benefits Committee (SEBC) voted to increase trend assumptions for medical and pharmacy claims for fiscal year 2025, hoping to avoid the $7.3 million deficit the Group Health Insurance Plan hit last fiscal year.
After raising health insurance premiums by 27% starting July 1, the state is preparing to pay back that deficit loan as well as account for the large increases in utilization and prices of prescription drugs
“Large increase in GLP-1s for weight loss from $14 million to $52 million. $24 million to $33 million for diabetes. An 11% increase in expected savings from Prudent RX — that gets us to an overall aggregate net average trend of 29%," said Willis Towers Watson Consultant Brian Stitzel.
The 29% trend increase in pharmacy claims is a big jump from the current assumption of 9% — largely due to the increase in utilization of weight loss drugs known as GLP-1s.
“Based on the fact that we've seen such high double-digit monthly increases for the past five or six months with February sort of as an outlier, we're now recommending that we continue to assume, for the balance of the year, higher trend assumptions starting to come down throughout the year.”
Stitzel is explaining that while July alone saw a 21% increase from June in GLP-1 claims, the consultancy is expecting new claims to level off at 2% monthly increases by January 2025.
The SEBC ultimately agreed with that assumption, approving an overall aggregate trend increase of 4% for weight loss drugs. Last fiscal year — the first year the state began covering GLP-1s for weight loss — saw an 18% trend increase.
The committee approved a 1% month-over-month trend increase for GLP-1s for diabetes.
Despite these conservative trend assumptions, the body is still expecting to see a 272% increase in spending on GLP-1s for weight loss and a 35% increase on spending for GLP-1s for diabetes for fiscal year 25.
The committee also approved an 8% trend increase in pre-65 medical claims and 5% for retiree medical claims – both are a 2% increase compared to last year.
The SEBC now plans to tackle approving a fiscal year 25 budget at their September meeting, currently eyeing a 14.4% increase in claims spending.
