The State Finance Council on Friday approved a proposed government contract with UnitedHealthcare Insurance Co. to provide Group Medicare Advantage with coverage for prescription drugs for eligible retirees in state health insurance plans for public schools and civil servants.
The State Employee Benefits Department will contract with the company to offer Medicare Advantage services to eligible retirees in the calendar years 2023, 2024 and 2025, with additional years to be added at the end of the initial three-year term, Jake Blade said. , director of the state employee income department. UnitedHealthcare Insurance Co. is one of the three companies that submitted bids for the contract.
There are about 16,000 retirees in the state health insurance plan for public school employees and about 14,000 retirees in the state health insurance plan for civil servants, he said.
Retirees who are 65 or older or who are otherwise eligible for Medicare will be automatically enrolled in the Medicare Advantage program and given the opportunity to opt out of Medicare Advantage and retain existing benefits, Blade said in a note. to the State Council of Finance.
The benefits offered under Medicare Advantage will reflect existing benefits, but also offer additional services, including coverage for sight, teeth and hearing, and other benefits not currently available to retirees, he said.
“We feel this is a very rich program that they need to consider,” Blade told the finance board.
The Medicare Advantage program will offer significant savings to retirees and the state, he said.
UnitedHealthcare will work nationwide to educate retirees and health care providers about the program and ensure that all retirees have the opportunity to make an informed decision, Blade said.
The proposed contract with UnitedHealthcare will be governed by strict performance guarantees, which the employee income department will monitor and determine the minimum amounts the seller must spend to provide compensation to members, he said.
In the calendar year 2023, the company will be paid $ 165.31 for each Medicare Advantage retiree per month in the government employee health insurance plan and $ 85.31 for each Medicare Advantage retiree per month in public school employee health insurance according to the proposed contract, according to Blade’s Note.
The state will cover most of the costs, and retirees will cover the rest, Blade said.
In the calendar year 2024, the company will be paid $ 170.31 per month for Medicare Advantage retirees in the Civil Servants Health Insurance Plan and $ 90.31 for each Medicare Advantage Retiree in the Employees Health Insurance Plan per month. in public schools, Blade said in a note.
In the calendar year 2025, the company will be paid $ 175.31 for each Medicare Advantage retiree per month in the Civil Servants Health Insurance Plan and $ 95.31 for each Medicare Advantage retiree per month in the Employee Health Insurance Plan. in public schools.
With 50% of eligible retirees enrolling in Medicare Advantage in 2023, the state health insurance plan for civil servants could save $ 25.7 million and the state plan for public school employees could save $ 9 , 3 million, Blade predicts.
With 50% of eligible retirees enrolling in Medicare Advantage by 2025, the state’s health insurance plan for civil servants could save $ 30.4 million and the plan for public school employees could save $ 10.1 million, according to Bleed’s note.
Board member Andrea Lea, Russellville’s Republican state auditor, said “this sounds too good to be true.” But Blade said the federal government provides significant subsidies to companies offering Medicare Advantage coverage.
The Medicare Advantage program has been in place since 2008 and has been successfully adopted by many countries, he said.
In response to Lea’s interrogation in March, Blade acknowledged that some retirees were skeptical that “this is too good to be true.”
Last year, the consulting firm Segal Group recommended to the Legislative Council that Medicare Advantage benefits for public and public school plans should be determined so that the benefits are at least equivalent to current benefits and that the coverage of prescription drugs for retirees in public schools are being rebuilt. The state should structure contributions to stimulate the Medicare Advantage program so that the lower premium leads to savings for both the state and retirees, according to the consultant.
The state should expect savings of at least $ 34 million to $ 41 million for the civil servants’ plan, and “we would expect [this] their numbers will increase during a competitive bid, “the Segal Group said last year. time of competitive bid.
SHARE OF EXPENSES
In other actions, the state finance council on Friday adopted a policy aimed at a fairer and more accurate distribution of increased health insurance costs among members of state health insurance plans for public school and civil servants and the state.
The policy is aimed at preventing fiscal crises and meeting the annual challenge of financing the health insurance of employees in a planned and organized manner, Blade said in a note to the Finance Council.
Under the policy, the state will adjust premium rates to reflect the actuarial risk that individual members pose on the plans and ensure that state contributions are evenly distributed in the plans, he said.
Blade said the share of government spending is inconsistent in health insurance plans and is relatively low compared to neighboring countries. On average, the state pays about 65% of premium rates for its employees, he said.
Adopting a higher uniform rate of 80% of the premium rate will take time to adjust the resulting increase in government funding, he said. The policy of the state covering 80% of the costs and employees covering the remaining 20% will be implemented in the state’s health insurance plans for the next five years, he said.
The State Finance Council also voted to abolish the $ 25 monthly wellness loan offered to plan members and the $ 25 monthly installment for non-participants in the wellness program.
Instead, the Employees’ Income Department recommends “all employees start switching to new premium rates … as if they have received the wellness bonus,” Blade wrote in a note to the state. “In other words, the minority of employees who do not meet the wellness and pay the additional fee of $ 50 will no longer be required to pay the penalty in 2023. Although this would impose additional costs on the plan, these costs will be less from the cost of wellness testing and will greatly simplify enrollment and eliminate red tape for our members. “
Blade said the plans still encourage plan members to see a doctor.
“We do not propose the abolition of the wellness program.
Blade said he expects the employee income department to soon offer rates for members of the 2023 health insurance plans.