State employees and schoolteachers will get a substantial discount on their health insurance premiums if they enroll in a new wellness plan, officials said Thursday.
Members of the State Health Benefit Plan, which covers 700,000 people, including state retirees, school personnel and dependents, will face a standard 17 percent hike in health premiums starting in January. But if they opt for the wellness program, the increase will be 11 percent.
The premium differential is just one of several changes the Georgia Department of Community Health’s board approved for the state’s employee health plan.
Without those changes, Community Health officials said, the state employee benefit plan would have a $280 million deficit in fiscal 2012, and a $535 million deficit the following year.
Another striking change is an effort to move dependents covered by the state employee plan into PeachCare, the state’s health insurance program for children of lower-income families.
The state anticipates 40,000 children will make this move if the federal government approves Georgia’s proposal. That switch would save the state $32 million for fiscal 2012, primarily by allowing federal matching funds in PeachCare to pay some of the costs.
PeachCare could attract these kids because premiums and co-pays for their care would be much cheaper for many parents than if their children continued in the State Health Benefit Plan, said Vince Harris, chief financial officer for Community Health.
Harris acknowledged that medical providers are paid lower rates under PeachCare than under the state employee plan. But he said the state is considering offsetting that pay reduction to doctors, dentists, hospitals and other providers.
The reason for the changes, said agency Commissioner David Cook, is ‘’to put the State Health Benefit Plan on a sound financial footing in a way that’s fair to everybody.’’
The employee plan has been successful in containing costs, he said, with spending rising by an average of 4.1 percent a year, less than half the national average increase of 8.3 percent.
Yet the premium increase drew a sharp response from the Professional Association of Georgia Educators, which has 81,000 members. “An 11 percent increase is a pretty substantial hike,’’ said Tim Callahan, a PAGE spokesman. “Seventeen percent is really substantial.’’
He said the premium hike comes on top of furloughs and three years of no raises for educators. “It’s another brick in their financial load,’’ Callahan said.
The wellness premium differential may cause some problems, he added. “It’s good to live a healthier lifestyle,’’ Callahan said, but he expressed concern that the lower premium may discriminate against people with pre-existing health conditions.
(Here’s a recent GHN article about a private employer’s wellness plan.)
State officials said the deficits in the employee health plan are caused partly by a decrease in the state’s and schools’ payrolls, with fewer employees. In addition, the number of state retirees is increasing, and they are being replaced by lower-paid younger workers, officials said.
Community Health also said part of the employee premium increase is caused by the federal health reform law’s requirements to cover dependents up to age 26; its ban on lifetime and annual spending caps; and its full coverage of preventive care services.
That will cost the state $17.9 million, Harris said.
On the other hand, the Affordable Care Act is expected to give the state $10.9 million for a reinsurance program for early retirees, officials said.
Tim Sweeney, senior health care analyst at the Georgia Budget and Policy Institute, said that the state’s blaming part of the premium increase on health reform is unfair. The preventive benefits under the reform law, he said, will make people healthier, ”and that will drive down the state’s costs.”
Sweeney added that the PeachCare shift will save the state money and also make health care less expensive for some employees, especially single parents.
Community Health also approved increasing the amount that school systems pay for their “noncertificated” personnel – bus drivers, cafeteria workers, secretaries, etc. That could drive some school systems to reduce their workforces, Callahan said.
Georgia will be the largest state health benefit plan to introduce such a wellness program, state officials said.
The wellness program is optional, state officials emphasized. It will require screenings for such risk factors as blood pressure, body mass index, cholesterol and blood glucose in the first year, plus a health assessment to set a baseline. The health information obtained will not be provided to employers.
Members who do not attempt to reach their targets in the second year will lose their eligibility for the discounted premiums.
Those remaining in the regular plan will also face higher co-pays for physician visits and higher deductibles.
The state said it is eliminating coverage of bariatric surgery and a $200 vision credit, but is adding coverage of tobacco cessation medications.
The agency will also request the state Legislature to approve $60 million in additional funding to the benefit plan.
Ross Mason, the Community Health board chairman, said of the changes: “Although painful, it’s the right thing to do.’’
The budget moves have not addressed the state’s liability for future retiree health care obligations of more than $15 billion.
Separately, Community Health said Medicaid and PeachCare won’t be subject to the 2 percent cut ordered by Gov. Nathan Deal for all state agencies.