Oklahoma legislator has plan to save on state employees' health costs
BY WAYNE GREENE World Senior Writer
Sunday, January 06, 2013
1/06/13 at 7:15 AM
Read the Tulsa World continuing coverage of the health care law.
OKLAHOMA CITY - A reworking of state employee health insurance to give workers a financial interest in holding down costs could result in huge savings for the state - if it's legal.
"I think it's clear (savings are) in the millions of dollars," said state Rep. Jason Murphey, R-Guthrie. "It doesn't take long to do the math. You're potentially talking about tens of millions of dollars."
The issue is complex, but here are the basics: Oklahoma self-funds its employees' health insurance coverage. Money allocated by the Legislature for that cost is pooled and invested conservatively. If the fund grows, the state has historically used any money left over after accounting for the costs of its employees' medical services to lower premiums on the policies.
State employees are guaranteed a benefits allowance - a set amount of money that varies from worker to worker - that largely assures that all or nearly all of their premiums and much of their dependents' premiums are covered. State employees have a broad variety of insurance plans where they can use their benefit allowance, and if they purchase the lowest cost benefits, they are refunded unspent benefit funding.
That system means that state employees have too little stake in limiting the state's health benefits cost, Murphey said.
Once state employees choose their insurance option, they have no choices other than to use benefits in every case they are available.
That needs to change, Murphey said.
He proposes using the insurance pool's investment income to fund health savings accounts for state workers.
Instead of lowering the premium costs, the state would encourage its workers to take on high-deductible policies and use the health savings account money to pay any out-of-pocket expenses they encounter.
If they can take steps to avoid a medical cost, they get to either keep the money left in their account or bank it for future medical costs, depending on how the system is fashioned.
Such a system to give workers a financial incentive to keep the state's medical bills down has worked to stabilize medical costs in Indiana, and it could work here, too, Murphey said.
"Let (state employees) make those choices," Murphey said. "Put them in charge of a consumer-driven health plan and then let them drag down rates or at the very least stabilize rates.
"When you do that, you empower them with making real choices about when they use the benefit."
The only problem is, start-up money is needed to fund the health savings accounts, and it may not be legal to use money in the state health insurance pool for that purpose.
"The heart of the question is what are the laws governing the fund's ability to use its investment returns to seed" the accounts, Murphey said.
He thinks the plan is already legal, but others, including Secretary of Finance Preston Doerflinger, disagree.
Doerflinger and Murphey were part of a working group of state leaders investigating the possibilities of state employee health savings accounts.
It's not a bad idea, it's just not allowed by the federal laws that regulate benefits, Doerflinger said.
While state law already authorizes employee savings accounts, without the insurance pool's investment funds there's no way to get the program rolling, he said.
"I don't really see much happening with this," Doerflinger said. "There's just not a great resource to get there."
Sterling Zearley, executive director of the Oklahoma Public Employee Association, also served on the working group. He said he doesn't know the answer to the legal question, but he is open to the possibility of using health savings accounts experimentally.
"I have no issue with looking at that issue as a pilot program to see if that is something that would be beneficial to the state and state employees in the future," Zearley said.
About state employee health plans
- Oklahoma's state employee benefit plan is relatively generous. State Rep. Jason Murphey described it as "extremely rich." State Secretary of Finance Preston Doerflinger referred to it as "robust."
- Murphey and Doerflinger agree that benefits need to be understood in a context of total state compensation. In many cases, state workers were given benefit improvements instead of pay raises.
- The premium rate for the lowest-cost family insurance option for Oklahoma state employees is $1,216.98 for the year 2012, all of which is paid by the state.
- The premium rate for the "standard" family policy option for Oklahoma state employees is $1,469.66, which is also funded completely by the state.
- In 2012, the state offered employees a benefit allowance equal to the average premium cost of high-end options, plus dental premiums, life insurance, disability insurance and 75 percent of the cost of high-end dependent health insurance. Employees can distribute the allowance among benefits as they prefer and receive money for unused portions of the allowance.
- In 2013, a change in state law caps benefits at 2012 levels or at the cost of the HealthChoice high option premium, whichever is higher.
- Nationally, 14 states, including Oklahoma, paid 100 percent of monthly premium costs for a basic or "standard" health plan for some or all individual state workers in 2009.
- Seven states, including Oklahoma, paid 100 percent of the "defined standard" monthly premium costs for at least some family members in 2009.
- Forty-six states, including Oklahoma, self-insure and/or self-fund at least one of their health-care plans. At least 20 states self-fund all of their health plan offerings.
- More than half the states allow, and some require, other levels of government to join the state employee health plan. In Oklahoma, state law allows educational entities to join the state plan but requires that participants be offered the same plan options as state workers.
Leaders get same state package
Like all other state employees, Gov. Mary Fallin and state legislators have a state health insurance package provided to them.
Earlier this year Fallin rejected federal funding for Medicaid expansion, which is a key element of the Affordable Care Act's effort to reduce the number of uninsured people in the nation. About 17 percent of Oklahoma's population doesn't have health insurance, according to the U.S. Census Bureau.
Fallin's decision led many to question what kind of government-provided health insurance the governor gets.
In short, she is treated exactly as any other state employee, which means she has access to a state benefits package.
Although they often have out-of-pocket costs when they are treated, most state employees don't pay health insurance premiums, and the coverage plans available to state workers are relatively generous.
"The governor has the same health insurance options as other state employees, and she is covered through a state policy," said Fallin spokesman Alex Weintz. "Governor Fallin supports the current practice of offering health insurance benefits to state employees."
Weintz is careful to distinguish the need to maintain a qualified state government workforce from supporting a massive entitlement expansion that would explode the federal deficit and leave the state budget at risk.
"The proposed expansion would incur significant state costs and astronomical federal costs," he said. "It offers no real reform of a Medicaid system in need of improvement, and it represents the height of fiscal irresponsibility at a time when our nation is already suffering from a deficit crisis."
Original Print Headline: Legislator has a plan to save on health cost
Wayne Greene 918-581-8308
Jason Murphey: He wants state employees to be "in charge of a consumer-driven health plan," the Guthrie representative said.