Lawmakers Say Insurance Reform Veto Will Cost Oklahoma Agencies

Republican lawmakers in Oklahoma say a gubernatorial veto will keep numerous agencies, including some of the state’s largest, from saving millions in health care costs. Legislation that supporters say would have streamlined state and education employee health insurance in an effort to lower costs for both the state and workers has been vetoed by Gov. Brad Henry.

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.

According to information posted on the Legislature’s Web site, many agencies had built the anticipated savings into their fiscal year 2011 budgets and are now looking for ways to fill those holes.

The veto 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, according to the bill’s sponsors.

The legislation would have also 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 worked to lower 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.

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.

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.

According to staff at the Department of Human Services, their agency 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.

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 annually over the last eight years, which is the portion paid by state agencies. In 2007, the premium increase for a family on HealthChoice was 20 percent and the benefit allowance increased 23 percent.

A veto of the bill 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.

Based on the current rate of growth in the benefit allowance, the total paid by state agencies is expected to be about $43 million for 2011 because of the veto of SB 2052.

The legislation would have 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.

The bill also 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.

The governor vetoed the bill under the belief that the reforms were not “thoroughly researched and debated throughout the four-month session with all stakeholders at the table,” according to the announcement released by the Legislature.

Source: Oklahoma Legislature

Topics Agencies Legislation Oklahoma