State worker health care cost increases for 2012 more clear

Final health insurance rates for state employees jelled this week, and 2012 premiums for the state’s most popular plan – the Uniform Medical Plan – are up by more than one-third.

But actual rates that workers pay for coverage after Jan. 1 could drop, depending on the plans they choose, according to Michelle George, a spokeswoman for the state Health Care Authority’s PEBB division.

The Public Employees Benefits Board voted last month to authorize seven insurance-plan options for employees in 2012 and other options for retirees. The options include a new health-savings account option for the first time. PEBB serves an estimated 340,000 state employees, dependents and retirees, including some of the state’s retired teachers. All must choose plans during the Nov. 1-30 enrollment period.

“We don’t know how many people will switch at open enrollment,” George said Thursday.

As outlined by PEBB, the monthly health insurance premium cost is rising by almost 35 percent for full-family coverage in the Uniform Medical Plan, chosen by 55 percent of enrollees. UMP rates climb from $175 per month to $236 for family coverage, and from $60 per month to $82, or up almost 37 percent, for employee-only coverage.

Workers’ share of premiums also go up for Group Health plans – hitting $288 per month for full-family coverage in the Classic plan, up from $205, and hitting $153 in the Value plan, up from $93. Group Health Classic becomes the most expensive plan among seven options available to employees and retirees.

Despite those trends, rates are actually going down year-over-year for a Kaiser Classic plan that is adding deductibles for the first time and is no longer the most expensive. The full-family coverage rate falls from $299 a month to $255, and employee-only coverage falls from $105 a month to $89.

Rate increases are driven by many factors. One is that overall health insurance premium bids received by PEBB were about 5 percent higher on average in 2012 compared with 2011, and costs for some plans are growing faster than others. The governor negotiated contracts with unions that are raising workers’ share of those premiums to 15 percent, up from 12 percent.

Also, the state is freezing its contribution at $850 per month, on average, for each employee’s health care, life insurance, disability and other benefit coverage.

With those higher costs, some employees might pick the new Health Savings Account option, for which Republicans in the Legislature won passage.

For each HSA plan that the state and employees split premium costs for, the state is contributing $700 in cash per subscriber each year into the account – with a maximum of $1,400 for subscribers with dependents. The subscriber is then free to use that cash to pay out-of-pocket costs such as co-pays or deductibles, which may be much higher than in traditional plans.

Washington Federation of State Employees leader Greg Devereux says HSAs are risky for participants who fall seriously ill and could have out-of-pocket costs as high as $10,200. The federation represents 40,000 state and higher-education employees and plans to educate them about the risks, spokesman Tim Welch said.

George said the PEBB is putting more details online in the next few days about employees’ and retirees’ options for 2012, and much of that will deals with the “consumer-driven health plan” option. George said PEBB wants employees to have good examples that let them make educated choices based on their own claims histories.

PEBB is sending notice of the new rates to employees and covered retirees later this month. Additional open-enrollment materials will be mailed in mid-October. The state plans a series of benefit fairs during the enrollment period, too.

Devereux has objected to other elements of PEBB’s offerings, including the size of co-pays for diagnostic tests in Group Health plans. It was this latter objection that led the Health Care Authority to resize the diagnostic co-pays – to $30 for Classic enrollees and $40 for the Value plan – and this raised premiums slightly for those plans and delayed the final rate calculations.

Many state-government retirees also are affected by the changes. Medicare-eligible retirees are getting a smaller state subsidy for their supplemental insurance premiums after lawmakers cut it by about $33 per month to $150 per enrollee. But some Medicare-eligible retirees might lower their overall costs – depending on which plan they choose.

Medicare retiree premium costs rise from about $194 per month to $214 for UMP Classic subscribers Jan. 1. But premium costs fall from $183 to about $149 for Kaiser Classic, which is enough to fully compensate for the decreased state subsidy. Premiums drop by about $7 to just over $130 for Group Health retirees.

A national survey released last fall by the Kaiser Family Foundation showed workers nationwide were paying almost $4,000 in 2010 for premiums and out-of-pocket health care costs – far more than what average Washington state employees were paying at the time.

That same survey of 2,046 firms and governments found that covered workers paid 19 percent of premiums for single coverage, up from 17 percent in 2009, and it found workers with family coverage contributed $333 per month toward premiums – still well above the most expensive offering for Washington workers in 2012.