The forecast for the state employee health insurance plan “isn’t pretty.”
That’s according to Insurance Commissioner Sandy Praeger, a member of the group that sets the design and rates for insurance plans offered to state workers and their families.
The Health Care Commission on Thursday made the final decision on the design of next year’s insurance plans, including the rate structure to pay for the services.
Among the changes the group approved:
• Premiums will increase 8 percent for employees and 15 percent for the agencies for which they work.
According to KHI News Service calculations, it would mean an increase of about $4.73 each month for a state employee earning between $28,000 and $48,000 yearly and enrolled for individual coverage in Plan A, the state's most popular health insurance plan. An employee with family coverage could pay about $30 more per month.
• Co-payments will increase by $5 for those enrolled in Plan A, bringing to $25 the cost for primary care and $45 for specialist care.
• Deductibles will double for those on Plan A, from $150 to $300 for a single person and from $300 to $600 for a family. A deductible also would be added to Plan B, which doesn’t currently have one. That would be set at $150 for a single person and $300 for a family.
Commission members viewed various scenarios for rates, deductibles, and other variables before agreeing to the final rates.
“I think it’s not pretty, but I think it’s responsible,” Praeger said. “I think it reflects the times. We’re no different than any other employer. We’re all feeling the pain.”
Earlier this year, the Kansas Health Policy Authority, which administers the State Employee Health Benefit Plan, predicted the state plan would be $4 million in the hole by the end of 2011 – prompting talk of a possible 42 percent rate increase for employees.
Doug Farmer, deputy director of the Kansas Health Policy Authority and the plan’s manager, told the commission that this year’s expenses turned in through April have been slightly lower than expected.
With the plan changes approved Thursday, the plan is projected to have more than $30 million in reserves by the end of 2011. The reserve account is critical for cash-flow purposes, among other things, Farmer said.
State employees in Oklahoma, which experienced a sharp drop in its employees’ plan reserve fund, were asked to pay for some medical services up front until the state could prove it could cover the services, he said.
“It (the reserve balance) has the potential to impact our members right at the point of sale,” he said.
It’s not the last time the commission expects to increase premiums.
The projections discussed Thursday allowed for a 7.5 percent increase for employees and a 10 percent increase for employers in 2012 and beyond.
Federal health reform could make things start looking up for state plan in 2014, Praeger said.
“We may be able to see some of the delivery changes that will change our reserves and make things better,” she said.
The new rates will take effect for employees Jan. 1. The rates for employers will take effect July 1 to coincide with the beginning of the state 2011 fiscal year.
The commission also voted Thursday to allow dependents who would “age out” of their parents’ health insurance coverage between July 1 and Jan. 1 to stay on the plan.
Federal law will require insurers to extend dependent coverage to young adults up to age 26 beginning in September. Current state plan coverage for dependents stops at age 23.
About 250 dependents would be eligible between July and January, which is when the next state plan year begins, and if all stay on a parent’s policy that would cost the plan an estimated $200,000.
Young adults younger than age 26 who have already been dropped will be eligible to re-enroll during October’s open enrollment period, Farmer said.
With no debate, the commission on Thursday also approved a new contract with CVS Caremark to provide pharmacy services for members of the state plan.
Ten companies submitted proposals to the health policy authority, and four were chosen as finalists, Farmer said.
The proposals were judged based on factors such as customer service, the company’s preferred drug list, and outreach to plan members.
The health policy authority recommended that Caremark CVS receive the three-year contract. The commission passed the recommendation without objection.
After the meeting, Commissioner John Staton said he wasn’t concerned about the decision.
“We have been fortunate to have a good relationship with the company and have not had the problems that have been reported in other states,” he said. “In that regard, we felt comfortable continuing the relationship with CVS Caremark for the term recommended."
“The biggest body of information I got was one-sided — from the unions — and I wasn’t able to balance it out,” said Commissioner Steve Dechant. “I rely on the staff to make good decisions and I do trust them.”