State employees, teachers face big premium hike

Print Friendly and PDF By: Andy Miller Published: Aug 23, 2012

Georgia teachers, other school personnel, state employees and retirees will face an average hike in their health insurance premiums of 9.5 percent in January, though some will get an increase of up to 30 percent, state officials said Thursday.

The Department of Community Health also said at an agency board meeting that Medicaid will have budget cuts of $60 million this fiscal year and $100 million in fiscal 2014, but that it is aiming not to reduce payments to medical providers.

That means Medicaid cuts will likely come from patient benefits and their utilization of health services.

Eligibility for Medicaid can’t be reduced much due to current federal requirements, said Community Health Commissioner David Cook, who added that states should be given more flexibility to run the program.

Cook told the media after the board meeting that the agency has not finalized the areas targeted for reduced Medicaid spending.

Gov. Nathan Deal’s Office of Planning and Budget ordered most state agencies to cut spending 3 percent in the current fiscal year and in fiscal 2014. For Medicaid and PeachCare, though, the ordered reduction in 2014 is 5 percent.

“It’s not a secret to any of us that this is going to be a difficult budget year,’’ Cook told a crowded hearing room.

Underfunding, delayed payments

 

Medicaid covers 1.6 million low-income and disabled Georgians, while PeachCare has about 225,000 children as members. Both programs are jointly financed by the federal and state governments.

The current Medicaid deficit is $355 million, but with budget cuts, the amount of money needed increases to $415 million this fiscal year. Next fiscal year, the amount needed to cover shortfall and cuts balloons to $492 million.

State officials say reasons for the Medicaid shortfall include the Legislature underfunding the program by $96 million; the agency delaying one month of payments to managed care companies; and continued program growth.

PeachCare’s shortfalls are much lower, totaling about $24 million for both years. Adding the budget cuts, the amount needed is $30 million.

Several other states have cut their Medicaid programs recently, Kaiser Health News has reported.

Cook also noted that a judge’s recent decision ordering Georgia to provide Medicaid coverage for an expensive drug that prevents premature births will cost the state about $20 million.

A federal judge granted a victory to a pharmaceutical company that had accused Community Health of preventing pregnant women from getting its Makena drug. (Here’s an AJC story about the ruling.)

The alternative drug was at least equally effective, and cost $20, Cook told the board meeting. Makena would cost hundreds of dollars, he said.

Cook told reporters Thursday that Georgia still plans on waiting till after the November elections before it decides whether to expand its Medicaid enrollment, as envisioned under the Affordable Care Act. But he also noted, “It’s difficult to fund the current plan.”

Tim Sweeney of the Georgia Budget and Policy Institute said in an interview with GHN that the Medicaid funding shortfall ‘’has been years in the making.’’

Georgia spends less per Medicaid enrollee than all but one other state, he said.

“Georgia needs a balanced approach that requires new revenues, so that we can properly invest in important areas such as health care and education,’’ Sweeney said.

If Medicaid benefits and utilization are cut, Sweeney said, it could potentially harm the health of patients.

Premium increases vary

Meanwhile, the state employee health plan, which covers 663,000 schoolteachers, school personal, state employees, retirees and dependents, is in much better shape financially than at this time last year.

Community Health succeeded in cutting almost all of an $815 million deficit last year in the state employee health plan through increasing employer premiums for non-certificate school personnel; implementing a large-scale wellness program; and moving many children into the PeachCare program, among other measures.

The State Health Benefit Plan (SHBP) finished fiscal 2012 with a relatively slight $16 million surplus, but there are no reserve funds available. Ideally, the reserve for the plan should be $346 million, officials said.

But SHBP faces an $89 million shortfall this fiscal year and $418 million in 2014. The total deficits, including medical claims for services already incurred, are $288 million and $617 million, respectively.

The state employee and teacher portions of the plan are running at a surplus, but the deficit from non-certificate personnel, such as cafeteria workers and bus drivers, is large, state officials said.

About half of the health plan’s members are now in wellness plans. Obesity remains a major problem, and the state is adding coverage for children with an obesity diagnosis to visit primary care doctors and dietitians.

The state attributed 2 percent of the average 9.5 percent premium hike to requirements from the Affordable Care Act, including more coverage of women’s health services.

The range of premium increases, though, runs from 1.5 percent to 30 percent.

Community Health board member William Wallace noted, “Employees are getting 0 percent raises. If they fall in the wrong category, they could have a 30 percent premium increase.”

The agency’s goal is to bring all employees’ contribution to their premium or insurance cost to 25 percent, with the employer picking up the remaining 75 percent. That’s a typical percentage split in an employer health plan.

The head of the state employee health plan, Trudie Nacin, said those getting the biggest premium hikes are employees who cover their spouses under the plan. The state has subsidized the spousal coverage previously.

Gone, though, are the surcharges to cover spouses who are offered coverage by their own employers.

Nevertheless, Tim Callahan, a spokesman for the Professional Association of Georgia Educators, told GHN that the insurance cost increases mirror those in the past several years. Educators haven’t had across-the-board raises in at least four years, he said.

“They’ve been feeling the pain for years now,” said Callahan of PAGE, which represents 83,000 educators, administrators and support personnel.  “They’ll feel this, too.”

The insurance increases could drive more people to retire, others to find non-state jobs, and may discourage young people from teaching, he said.

Callahan, though, did not blame Community Health for the premium hikes. “They’re getting eaten alive by health care costs,” he said.

Sweeney of GBPI said the Affordable Care Act requirements will increase patients’ access to preventive and primary care. The new services, such as greater contraceptives coverage and better access to counseling for domestic violence victims, “are really good news for State Health Benefit Plan members,’’ he said.

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