Friday, October 22, 2010

High Deductible Health Plan in Works?

The Legislative Health and Human Services Interim Committee gathered together on 20 October, 2010 to discuss the State Employee Health Insurance plans. Senator Chris Buttars brought in Don Ruzicka, an independent insurance broker, to explain a proposed health insurance option for state employees.

Ruzicka discussed the costs associated with the current insurance plans that include co-pays, deductibles, co-insurance payments, premiums, and out of pocket maximums, stating that it is very complicated and continues to get more and more expensive year after year. The 3rd party pay system that is currently in place is not cost effective and incentivizes overutilization.

In his statement about what he sees as a marketable plan for the state, Ruzicka discussed a Qualified High Deductible Health Plan (HDHP) that would simplify insurance and create positive incentives for health lifestyles and be more cost effective. In the HDHP, Ruzicka stated that the deductible would be somewhere around $2500 for an individual and $5000 for a family. After the deductible is met the co-insurance payment would be 100%, meaning that any additional costs exceeding the deductible would be covered.

In addition, a Medical Reimbursement Fund (MRF) would be set up by the employer of $1000 for an individual and $2000 for a family to be used to cover some of the deductible costs. For employees to reach their deductible with this contribution, the most they would spend would be either $1500 or $2500. Also, if an individual did not use their full amount allotted in the Medical Reimbursement Fund, the employer could elect to provide a taxable bonus to the employee with the excess funds.

Ruzicka stated that the plan could save the state as much as a third of what is currently being spent on the traditional plan.

When asked if a bill was going to be run to implement such a plan, Senator Buttars mentioned that he may run a bill or try to implement some type of pilot program.

Representative Brad Daw asked what the difference was between this and a HDHP with a Health Savings Account (HSA). Ruzicka answered that the money is locked up into the HSA, where the MRF could provide positive incentives through a bonus program.

PEHP was listed on the agenda to provide comment on this plan, but was not given an opportunity to share their views in the committee.

UPEA has a seat on the Health System Reform cost Containment Workgroup that meets monthly. HDHP/HSA plans have been discussed extensively in the workgroup. UPEA is currently looking into different plan designs that would benefit state employees with multiple insurance options. If there are any questions, please contact Christy Cushing at or (801) 264-8732 ext. 216.