When I joined the Office of Group Benefits policy and planning board earlier this year, I joined as the insurance industry representative. I’ve never worked for the state and never was a member of one OGB’s plans. My knowledge of OGB was fairly simple. I knew they offered health insurance to state employees and retirees, but most of the other things I’d heard came from news reports when OGB outsourced its claims administration to Blue Cross back in 2013.
I do my homework, though. Before I walked into my first board meeting last month, I did some research and read several recent articles about OGB’s state of affairs. Based on what I read, I walked into that boardroom expecting to find problems. What I didn’t expect was to hear about an organization that was streamlining processes, becoming more efficient and acting more like an employer rather than an insurance company. By doing so, it is now offering some extremely comprehensive and affordable plans that have set up OGB to offer great benefits for years to come.
In private industry, decision-makers sit down every year and review costs, claims trends and plan designs to determine the next year’s strategy. If a company is self-funded, as OGB is, they look to actuaries to determine next year’s projected claims. Those numbers are then run through different models to determine the best balance of premium dollars versus plan design. OGB does the same thing. Every year, OGB sits down with its actuary and reviews claims trends and plan designs. The difference is that at OGB, changing benefits or rates becomes front page news.
According to a Mercer survey, since 2008, the average premium increase across the country is around 6 percent a year. It’s been remarkably consistent: 6.3 percent in 2008, 6.9 percent in 2010, 6.1 percent in 2011. Not once since 2008 has OGB ever raised rates more than the national average. In fact, while national rates have increased by 25 percent since 2008, OGB’s have risen by less than 9.
OGB has responded to the scrutiny by developing some thoughtful, balanced plan options. Most private employers offer one or two plans, typically that include a base plan that has a higher deducible and lower premiums and a buy-up plan that allows employees to pay a higher premiums to have a lower deductible. OGB is expanding choices that allow employees to purchase a health plan that better fits their individual needs. In 2015, OGB will offer three HMO plans, a PPO and two consumer-driven plans. For retirees, there are even more choices. They not only have the HMO, PPO and CDHP options, but a variety of Medicare Advantage plans available as well.
The reality is that OGB cannot continue to operate the way it has in the past. The Affordable Care Act will cost the state $23 million a year for the next three years. On top of that, health care trends are still rising at about 6 percent a year. And OGB’s current plans are so rich that if they aren’t changed, they will trigger a “Cadillac tax” of $31 million in upcoming years.
After reviewing the 2015 options, spending time with OGB’s leadership team and talking with the board, I feel confident in OGB and its mission. When I go to my next board meeting in September, I will walk in with the knowledge that OGB is a member-focused organization dedicated to offering affordable and comprehensive benefits to state employees and retirees.
Scott McKnight, vice president of BancorpSouth Insurance, is a member of the Office of Group Benefits policy and planning board.