HELENA — The 16,000 state employees and retirees insured by the state health plan likely will face rate increases of 15 percent to 27 percent next year, and lower benefits, to cover higher-than-expected medical costs, state officials said Monday.
“We are doing the best we possibly can in the situation we are in this year to keep the plan solvent and have a little bit of a cushion before we’re in the danger zone,” said Karen Wood, acting head of the state Health Care and Benefits Division. “I know this isn’t a pretty year.”
Wood spoke Monday to members of an employee advisory council, a majority of whom opposed the rate increases and benefit reductions.
However, the council’s vote is only advisory, and Gov. Steve Bullock’s administration must decide within a week or so whether to adopt the changes for 2015.
Wood said the state must send information on 2015 rates and benefits to the printer by the end of the month.
Bullock’s state Budget Director Dan Villa said Monday the administration knew 2014 would be a loss year, because it held rates down while using plan reserves to cover rising costs. Higher rates for 2015 were expected, he said.
Still, state employees who cover only themselves on the plan shouldn’t have to pay more for health care next year. The state is increasing the amount of money it pays to cover employees’ share of health care premiums in 2015, and it will cover the entire cost of medical and dental premiums for a single person, even with the rate increases.
Retirees covered by the plan would be hit the hardest by the proposed rate increases.
A single retiree currently pays $734 a month for medical coverage by the health plan. Next year, they would pay $931 a month, a 27 percent increase.
The other proposed changes include:
An 18 percent increase in medical rates for current employees, with monthly premiums rising from $717 to $845.
However, the state is increasing the amount of money it pays each employee to cover health care payments from $806 to $887. That amount will cover the medical and dental premiums for a single person.
The rates for a couple would increase from $926 a month to $1,070.
A 50 percent increase in deductibles, which would go from $500 to $750 a year for a single person and $1,000 to $1,500 for a family.
Co-payments for doctor visits would increase from $15 to $20 — although employees still can visit state funded health clinics for free. The clinics are in Helena, Billings, Miles City and Missoula, and a fifth clinic is expected to open this year in Butte.
Kelly Grebinsky, an actuary hired by the state, said the health plan is projected to lose $14 million this year, including nearly $4 million from large claims that came in higher than expected, $5.5 million from claims that are coming in later than expected, and a planned $4.8 million draw-down of its reserve.
The self-funded plan’s reserve is expected to drop to 246 percent of the legal minimum surplus, he said. The state’s long-term goal is 300 percent, and at 200 percent, plans are considered in financial trouble, he added.
Wood said factors causing the higher costs likely include an “open enrollment” period last fall, when covered employees were allowed to add dependents to the plan, and increased referrals from the free health clinics.
The clinics offer free health screenings, which discovered many employees with chronic or serious diseases, which then needed to be treated elsewhere, she said.