Commissioner of Administration Kristy Nichols calls it a “right-sizing of benefits to costs.”
But many state employees, retirees and their dependents say the changes they’ll be asked to start making next month translates to increases in out-of-pocket expenses for their health care.
About 230,000 enrollees in the state’s Group Benefits program will be deciding in October which of a variety of new health insurance plans best meet their needs. The new coverage goes into effect Jan. 1.
It’s part of the Jindal administration’s plan to cut down state government expenses for the program, prop up the fast-dwindling reserves for helping to cover costs all while encouraging state workers to make better health care choices. As the employer, state taxpayers pay 75 percent of state employees’ premium costs. The members pay the rest.
The administration hopes to save $1 billion over five years, with that money staying in the funds operated by the Office of Group Benefits.
That goal translates into big changes in the health insurance products offered: higher deductibles, co-pays and coinsurance and out-of-pocket maximums as well as prescription drug benefits that financially encourage use of generic drugs.
“By adding and/or increasing deductibles, increasing the out-of-pocket maximum and increasing co-payments and coinsurance, the new health plan offerings will significantly reduce the cost to OGB, while the OGB member pays more for their medical services,” according to an analysis by the Legislative Fiscal Office.
For instance, 75 percent of Group Benefits members are enrolled in a health maintenance organization plan, better known as HMO, which has no deductible. The comparable new offering — called Local Plus — has a $500 deductible.
The Fiscal Office analysis found that the average out-of-pocket costs for all proposed health plans are 47 percent higher for an active single member than the average out-of-pocket costs of the current health plans.
Nichols said some state workers will see their costs go down, depending on which of the insurance options they choose. The state is offering three different HMO plans: a preferred provider organization plan, called a PPO, and two consumer-driven plans for active employees.
Generally, an HMO plan allows the enrollee to pick a primary care physician and all health care services go through that doctor. A PPO allows the flexibility of going to any health care professional without coordinating with one primary care physician. Consumer-driven plans allow for higher deductibles, but the premiums are lower.
Retirees who also are on Medicare, the federal program that guarantees health care coverage for people 65 and older, will be able to choose from three HMO options, one PPO option and one consumer-driven option as secondary plans, as well as Medicare Advantage plans.
“There’s a balance we are trying to strike,” Nichols said. The news plans keep costs under greater control for state government while providing a wider range of options for the state worker.
Nichols said only 7 percent of OGB’s HMO members needed inpatient hospital care last year.
But, Legislative Fiscal Office analyst Travis McIlwain said, there’s the question of whether current HMO and PPO enrollees will “decide to roll the dice” and gamble that they will not have to go to the hospital or have that one big medical expense during a given year. If there’s no major problem, the plan will save individual Group Benefits members on insurance costs. But out-of-pocket costs can quickly become higher than those of the new HMO and PPO plan offerings with a hospitalization, he said.
“Each individual person will have their own story,” McIlwain said. “If the folks that currently have the HMO and PPO plans like the way they are structured now and try to go to the one pretty similar, they will be paying more.”
Tools will be available to help Group Benefits members analyze their situation to determine what plan fits them and their families best, including an out-of-pocket cost calculator. All that will be available online by Sept. 15 on the Group Benefits website, Nichols said. At least 40 meetings have been set for October, along with six live webcasts. Additionally, information on the choices is being sent to households and a call center with qualified benefits experts activated that is capable of handling up to 10,000 calls a day.
“We don’t want there to be any segment of the population that we don’t touch,” Group Benefits chief Susan West said.
There also will be a dedicated team to reach out to those members who have not made insurance choices as the Oct. 31 deadline approaches, she said.
Nichols said many Group Benefits members have policies that cover “more than they need” and might consider options that cost less.
Two consumer-driven options — called Health Reimbursement Arrangements and Health Savings Accounts — offer much lower premiums than other plans — $98 and $57 a month, respectively — and provide limited employer funding that helps pay out-of-pocket expenses.
“Thousands of people can save money,” Nichols said.
Those who do not make a decision by Oct. 31 will be automatically enrolled in a consumer-driven plan.
Those who enroll in certain plans and participate in a new wellness initiative can get a discount in their insurance premium in 2016, Nichols said. The hope is to reduce medical claims and thus program expenses.
For Medicare-eligible retirees, Nichols said there are plans members can go into at no cost, Nichols said.
Frank Jobert, executive director for the Retired State Employees Association, said it’s going to be “sticker shock” for retirees as well as many active employees who are Group Benefits members.
“They are going to be leaving a lot of people out to dry,” Jobert said.
Jobert said about 25,000 retirees are not Medicare eligible, live on limited incomes and depend solely on Group Benefits for their health care.
“It is RSEA’s view that the plans, for the most part, are clearly detrimental to the OGB plan membership and could actually drive some participants out of OGB due to affordability issues and concerns,” Jobert said.
Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the Office of Group Benefits, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog