As usual, the annual renewal of the government’s health-care package drew the ire of senators, who said during Monday’s full session they were being put between "a rock and a hard place" by having to ratify the contract just a few days before it expired.
John Abramson Jr., chairman of the GESC/Health Insurance Board of Trustees, tried to placate senators by explaining that the resulting savings to the government was worth the wait, but the same issue arose again and again before the package was approved around 8:15 p.m. Monday. More specifically, senators argued that local law lays out when the package needs to be submitted to the governor and the Legislature for approval and this year, much like every other, those deadlines were ignored.
An amendment to the package was submitted by the governor last week, which legislative legal counsel Yvonne Tharpes said factored in one major change: the switch over from MetLife to CIGNA on the government’s life and accidental death and dismemberment insurance plan. The package as amended passed on an 11-to-3 vote, with Sens. Craig W. Barshinger, Carlton "Ital" Dowe, Louis P. Hill, Neville James, Shawn-Michael Malone, Terrence "Positive" Nelson, Nereida Rivera-O’Reilly, Sammuel Sanes, Patrick Simeon Sprauve and Alvin L. Williams voting in favor.
Sens. Adlah "Foncie" Donastorg, Usie R. Richards and Celestino A White Sr. voted against ratifying the agreement, while Sen. Wayne James was absent.
Premiums on the government’s medical and prescription drug coverage policy will increase by 8 percent, while life and accidental death and dismemberment insurance premiums will increase by 4 percent and dental will increase by 10 percent.
CIGNA had initially requested a 12.4-percent premium rate increase (which adds up to about $12.9 million) on the medical and prescription drug policy, but the board was able to cut it down to 8 percent with two changes to the plan: increasing the lifetime maximum benefit for members from $1 million to $3 million, and upping the in-network, out-of-pocket maximums to $3,000 for individuals and $6,000 for families. The out-of-network maximums will also jump to $7,500 for individuals and $15,000 for families.
The 8-percent increase will save the government $4.1 million annually compared to CIGNA’s original 12-percent request, according to Health Insurance Board consultant Steve Burrows.
No changes will be made to the dental benefits, he added.
The government’s plan covers about 30,000 employees, retirees and their dependents.
Meanwhile, the board had negotiated with MetLife on a life and accidental death and dismemberment rate guarantee that ran through FY 2009.
"Citing poor claims experience, particularly for the retiree portion of the life insurance plan, MetLife has requested a substantial rate increase for FY 2010," Burrows explained. "MetLife also proposed doing away with combined rates for actives and retirees and instead using separate rates for these two groups that more closely reflect their claims experience."
In short, MetLife had proposed to reduce the government-paid basic life rate for active employees by 65 percent and increasing the retiree rate by 293 percent, he said. For the member-paid optional life coverage, MetLife had proposed reducing the rates for active employees by 10 percent and increasing them for retirees by 40 percent. The resulting increase, if the government didn’t adopt the separate rates, would have been 15 percent, Burrows said.
The Health Insurance Board of Trustees went to CIGNA for an alternate plan, which was presented at a "significantly reduced cost," he said.
Given the last-minute change, board members urged senators to approve another bill Monday that would waive the board’s mandate to open up the bidding for proposals from qualified insurers 180 days before the existing contract is up. Another section of the bill repeals an existing law that Abramson said calls for a portion of the government’s premium payments to be deposited into a claims-reserve fund set up at a local bank.
While Abramson and Burrows said repealing the fund requirement would save the government more than $800,000 in interest during FY 2010, senators rallied against the bill, saying they would rather have the money — which would be used to pay pending claims if the government terminates its contract with CIGNA — held at a local institution instead of having CIGNA invest it in its portfolio.
The issue raised Monday was whether the money belonged to the government or CIGNA, and Richards — who co-sponsored the original legislation setting up the fund — said the matter should be settled in court.
The government would also save more money if it weren’t constantly behind in paying its premiums, Burrows said later.
The government has racked up $25 million in debt to CIGNA, which started after the government didn’t make its first payment to the company and continued to lag behind in subsequent payments by three months, Abramson said during a break in the session.
The bill was lost in a 7-to-7 vote, keeping the reserve fund open by default and the bidding requirement still on the table.
Voting against the bill were Donastorg, Malone, Nelson, O’Reilly, Richards, White and Williams, while voting for it were Barshinger, Dowe, Hill, Neville James, Sanes, Sprauve and Thurland.