Proposed Budget Doubles Down On State Health Benefits Savings

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For the second year in a row, the Governor’s proposed budget for Fiscal Year 2018 assumes tens of millions of dollars in “savings” through reforms to the state health plans for public workers and teachers.

State officials have said the biggest component — more than $81 million — would come from savings related to an out-of-network billing “transparency” measure that has yet to be shared with the Legislature. Another $43 million in savings is dependent upon TPAF union members agreeing to reforms they refused to adopt last year related to adoption of a medicare advantage plan for retirees.

Out of Network Transparency

According to State Treasurer Ford Scudder the out-of-network savings would involve transparency legislation that could save money for the State Health Benefits Plan and School Employees’ Health Benefits Plan by “allow[ing] the employee to know all the costs they would have to endure when they go into a procedure and decide is this worth it.” 

While the out-of-network issue has been hotly debated in the Legislature in recent years, the fiscal impact has never been clear.  Based upon Scudder’s outline the transparency solution the Administration may propose could be less stringent than prior proposed legislation sponsored by Democratic lawmakers last year that would have capped charges for out-of-network procedures at 100 percent to 250 percent of the Medicare rate.

Adopting Medicare Advantage

Scudder also raised potential savings through the movement of TPAF retirees receiving health benefits into a Medicare Advantage plan.  Last year, State representatives on the School Employees’ Health Benefit Plan Design Committee proposed moving eligible retired members receiving healthcare from the School Employees Health Benefit Program (SEHBP) from their current retiree health benefit program to a Medicare Advantage program. Currently 12% of retired members already have a Medicare Advantage plan through Aetna.  However, the 88% that chose Medicare as their primary insurance (with Horizon supplementing that coverage) would be forced into a Medicare Advantage program under the proposal.  Union members on the committee had expressed serious concern with potential limitations in service under the advantage plan last year.  In light of this, it is unclear whether the union members of the Committee will agree to the change.