CapitolBeatOK Staff Report

Published: 18-Jun-2010

Numerous agencies, including some of the state’s largest, were set to save millions from legislation that the Legislature’s two Republicans leaders believe would have streamlined state and education employee health insurance in an effort to lower costs for both the state and workers.

In a press release sent to CapitolBeatOK, Speaker of the House Chris Benge contended Governor Brad Henry’s veto of that legislation has left many agencies — who built those anticipated savings into their fiscal year 2011 budgets — looking for ways to fill those holes. Insurance Commissioner Kim Holland, a Democrat like Henry, expressed disappointment in his veto.

The veto also leaves state agencies, school districts and other entities that use HealthChoice insurance plans possibly facing as much as $75 million in premium increases if current trends continue, the Speaker contends.

Senate Bill 2052, by House Speaker Chris Benge and Senate President Pro Tempore Glenn Coffee, would have consolidated the Oklahoma State and Education Employees Group Insurance Board and the Oklahoma Employees Benefits Council into one entity called the Oklahoma Health and Wellness Board. At the end of the legislation session, the two Republican leaders had touted the measure as a significant improvement in the state’s provision of health insurance for government employees.

The legislation would have required a competitive and winner-take-all bidding process for a statewide HMO for state employees, in addition to current PPO insurance offerings. This change would have lowered the cost of an HMO plan for state employees through volume purchasing and decreased administrative costs, and would have in turn brought the state employee benefit allowance more in line with actual health insurance costs, Benge said today (Friday, June 18).

So as to not negatively impact existing state employees, the state employee benefit allowance was frozen by the legislation, and would have been indexed to the cost of the basic HealthChoice insurance plan, Benge’s release said.

Many state agencies were set to realize millions in savings as a result of the bill, including the Department of Human Services and the Department of Corrections. Benge’s staff release said the Department of Human Services had factored in $1.2 million in savings into the FY11 budget that will now have to be filled from other sources because of the veto.

The Department of Corrections stood to save $3.7 million if the bill had been signed into law, today’s release contended. Currently, the benefit allowance is calculated based on an average of all the current insurance plan offerings, including two HealthChoice options and multiple HMO plans.

Though the majority of state employees select one of the HealthChoice plans, the more-expensive HMO plans drive up the benefit allowance to a level often above the actual cost of the employee’s health insurance costs.

The average premium increase for a family on HealthChoice has been 10 percent annually over the last eight years. The average benefit allowance increase has been 12 percent (the portion paid by state agencies) in that same time. In 2007, the premium increase for a family on HealthChoice was 20 percent and the benefit allowance increased 23 percent.

The veto means that state agencies, school districts and all other entities that use HealthChoice, based on the last eight year trend, could see premium increases of nearly $75 million, Benge said. In his analysis, based on the current rate of growth in the benefit allowance, the total paid by agencies is expected to be about $43 million for 2011 because of the veto of S.B. 2052.

The bill was nixed last week, with the governor asserting in his veto statement, “Despite the scope of the proposed changes, the final draft of this 289-page bill was not revealed to state legislators or other stakeholders until the final hours of the legislative session. While supporters’ goals of an improved system and more manageable costs are laudable and desirable, there is no supporting evidence to confirm that S.B. 2052 would accomplish those goals and there are legitimate concerns that it might actually create a less responsive system with less manageable costs.”

Governor Henry concluded, “For such a sweeping policy change to be enacted into law, it must be thoroughly researched and debated throughout the four-month session with all stakeholders at the table, not unveiled and passed in the hectic and often chaotic final moments before adjournment.”

“The efforts of the House and Senate working group were thorough, deliberative and inclusive,” Commissioner Holland said today. “Our goal was to maintain competitive benefits for our state and education employees and their families while reducing costs to those employees and to state agencies. We accomplished our goal and I am disappointed by the veto.”

Last year, Benge and Coffee created the State Employee Health Insurance Review Working group, which was comprised of a bipartisan group of House and Senate members and the state Insurance Commissioner, Kim Holland. The working group crafted the vetoed legislation based on the recommendations proposed in a report from a national insurance consultant, which was publicly released and sent to the governor last December. Upon the release of the report, the Speaker’s staff also met with the governor’s staff to discuss the report and the potential for legislation.

“This legislation represents common sense reform that was the result of 15 months of cooperative effort. All stakeholders were involved in the crafting of this legislation and many people gave a lot of time and effort to make this happen. The legislation was supported overwhelmingly in the House and Senate and was endorsed by the state and education employees associations,” said Benge.

“Rejection of this legislation will allow health care costs to continue to spiral out of control for our state, which is a major concern for every agency and state and education employee in this state. It is inaccurate to say that this legislation was not properly vetted.”

The legislation would have also directed the new board to create a wellness program for state employees and requires the board to spend surplus funds on wellness programs, health savings accounts (HSAs) or flexible spending accounts (FSAs). Utilization of HSAs, FSAs and successful wellness programs have been proven to contain the growth of rapidly increasing health care costs by encouraging personal responsibility and better health outcomes.

Finally, the bill would have required an annual ongoing savings of 15 percent on administrative overhead and directs the board to eliminate any duplicative positions, services or assets.

“This is a very important issue to state and education employees, as well as all Oklahoma agencies,” said House Speaker-Designate Kris Steele, a Shawnee Republican. “I intend to study this subject over the interim in preparation for the next legislative session.”

NOTE: Editor Patrick B. McGuigan contributed to this report.