Delaware's State Employee Benefits Commission expects the state’s group health insurance plan will invest an additional $264 million for primary care between 2029 and 2035.
It comes under the recently passed Senate Bill 1, a healthcare cost savings measure that initially got pushback from hospital representatives during the state's second half of its 153rd legislative session.
Senate Bill 1 calls for increased primary care investments required in 2018 legislation to continue, moving from 5.8% of total healthcare spending to 6.8% in 2029. And spending is required to increase by one percent annually over the subsequent five years.
SEBC consultant Brian Stitzel with WTW said the bill allows for exclusion of high-cost claimants in the group plan formula, but it doesn’t define high-cost. For his model, Stitzel said it is individuals with claims exceeding $150 thousand, which he got from the department of insurance.
The model also assumes healthcare savings over time because people will have better access to preventative care, he said. "There's a return on that investment in terms of better management, better health outcomes, lower spend, fewer ER visits, etc."
He said WTW's model took a conservative approach, "in terms of what that return and investment might be, with sort of each cohort investment in primary care spend having the return on investment of that tranche ratchet up over time."
Stitzel added SB1 is expected to save the group health insurance plan money, with the big savings coming from the bill’s reference-based pricing provisions.
Caps on what hospitals can charge to the state employee health insurance plan will phase in starting in 2030, based on a percentage of what services cost under Medicare. What hospitals can bill will eventually cap out at 250% of Medicare pricing.
Stitzel said the caps will save the health insurance plan a projected $36 million during the first year of implementation and $39 million in year two. Projected savings accelerate after that, with, "a big jump up in FY32 due to the dropping of the Medicare caps."
Projected savings almost double in FY 32 to between $70 and $80 million dollars for those next two fiscal years, he said. Then the a final drop in pricing, to 250% of Medicare prices in 2034, puts savings at over $100 million for that year.
Stitzel said those savings offset the anticipated $262 million dollars SB 1 calls for the state to invest in primary care during the same time.
Health systems that will be subject to the Medicare reference base pricing will be ChristianaCare, Bayhealth, and Nemours.
