The State Employee Benefits Committee (SEBC) the body in charge of the stat'e Group Health Insurance Plan (GHIP) — approves an increased budget for the current fiscal year based on a 27% health insurance premium hike for state employees, higher enrollment and increased prescription drug utilization
While last fiscal year’s premium contributions hovered just under $1 billion, FY25 is expected to bring in close to $1.25 billion, but outside consultant Brian Stitzel says claims are also on the rise.
FY25 claims are expected be about 14.4% higher than FY24 — growing from $1.2 billion to about $1.4 billion.
With all revenues and expenditures taken into account, the state is expected to bring in $1.5 billion in revenues and spend around $1.4 on insurance claims and other expenses.
The state’s health insurance plan is expected to remain in a multi-million dollar deficit for seven months but is projected to end the fiscal year in a $34 million surplus.
This is a stark contrast from the plan’s fate this past fiscal year, which required a $7.3 million loan from the state to avoid ending the year in a deficit — the GHIP is expected to pay that sum back this month.
The committee has largely attributed the deficit to the overwhelming use of prescription weight loss drugs, which the health insurance plan decided to cover for the first time this past fiscal year.
But Stitzel continues to remind the committee future premium hikes will likely be necessary.
He's proposing a way to vary the insurance hikes for active employees, pre-65 retirees and medicare retirees, but currently, premium hikes are implemented across the board.
“For now, the entire GHIP is rated as one big experience pool and therefore would need an average 4.4% increase per year for the next three years to wind up at the end of FY28 with the $0 deficit," Stitzel said.
This proposed increase is more stable than a prior proposal to implement no hike next year but instate a 7.3% premium increase in FY27 and a 10.7% increase in FY28.
A varied approach, creating a unique rate increase for each group, could lead to a 5% yearly increase for active employees — a $2 - $21 monthly employee contribution increase —, an 18% yearly increase for pre-65 retirees — a $8 - $74 monthly retiree contribution increase — and a 0% increase for medicare retirees.
More than 60% of state Medicare retirees do not contribute towards the cost of Medical and/or prescription drug benefits.
