In response to the very high concerns voiced by faculty and staff across the Nevada System of Higher Education, NFA remains actively involved in the System's efforts to restore adequate health coverage as quickly as possible. In this story, we report on two, related developments: 1. the work of the NSHE Task Force on Health Coverage seeking alternatives to current PEBP coverage through a short-term supplemental benefit for NSHE employees (possibly as early as next year) and considering a longer-term alternative outside of the Public Employees’ Benefits Program (which raises some legal and financial challenges to achieve), and 2. this Thursday's PEBP board meeting, where an alternative to current coverage will be considered for next year.
NSHE Task Force update: Legal and Financial issues related to seeking improved coverage
At last week's Board of Regents meeting, the NSHE Task Force on Health Coverage presented an update on its work, which included the following:
- data from research (with the help of an external consultant) on current costs, coverage and insurance utilization of NSHE employees within PEBP
- discussions with the PEBP board of improvements that we hope to see in both customer service and coverage
- an exploration of longer-term alternatives to current coverage for NSHE employees through a self-funded insurance program outside of PEBP
In light of this discussion, and the high priority that faculty and staff place on this issue, it is worth explaining some of the legal and financial issues involved in this discussion.
First, neither the board of regents, the chancellor nor the campus presidents have the authority to seek insurance for their employees outside of PEPB. That would require approval of the PEBP board and/or legislative action. That approval is not assured and would require a careful effort by the System as a whole to educate the legislature and the governor, and to convince them that this would lead not only to better coverage for us but be cost-effective for the entire state.
Under current PEBP board policy, any group of employees that leaves the program must demonstrate that the withdrawal of those participants would not have a negative financial impact on the overall program of greater than 5 percent. If PEBP determines that the withdrawal would have an adverse impact of greater than 5 percent, the group withdrawing is responsible to cover all costs of its departure on the remaining participants.
One question the NSHE consultant will study is whether the withdrawl of NSHE participants as a group would have a negative financial impact on PEBP of greater than 5 percent of its total program budget. If that were the case, then we would need legislative action to change that rule before we could pursue alternative insurance. (It would also mean, of course, that NSHE participants had paid significantly more over the recent past than we have received in benefits. If that is the case, it would mean that the reserve funds held by PEBP came disproportionately from NSHE participants – and this would be an argument for letting NSHE withdraw without having to pay for the cost to remaining PEBP participants.)
At the November PEBP board meeting, NSHE leadership (namely, then vice-chancellor Bart Patterson, and now Renee Yackira, director of government relations for NSHE) testified to the PEBP board to express our concerns. They urged PEBP to consider, as early as next year, a "middle tier" of coverage between the current high-premium, fee-for-service HMO and the much-derided high deductible "consumer-driven" plan that replaced the old PPO.
However, such a "middle tier" may not be financially feasible for PEBP to offer, because the costs to the program have increased at a rate of roughly 10 percent per year for each of the past several years. These rising costs are the main issue in the question of whether NSHE – and the state – could get better coverage for the same money than PEBP currently offers. The question of whether PEBP reimburses health care providers at higher rates than other insurance plans has been posed going back to the 2009 legislature, but has not been fully answered. (The PEBP board and staff have stated publicly that rising costs are due to over-utilization of service by participants and that the "consumer-driven" high-deductible plan will curb that over-utilization and cut costs. Critics of PEBP's coverage have maintained that the roughly 10-percent annual increase in the cost of the program has been passed along almost entirely to state public service workers, rather than reducing the rates it pays providers. This claim is hard to verify, however, because reimbursement rates to providers are considered proprietary information and are not publicly available to participants.)
There is then the separate issue of supplemental benefits within NSHE. The task force was charged to consider this possibility and recommended consideration in its report of last January and has continued to discuss this in meetings this fall. This issue was not explicitly presented in the task force's report to the board on Dec. 2, but several regents did ask about whether immediate action would be possible.
A supplemental benefit for NSHE employees would not require legislative approval or, based on what the task force has researched, PEBP approval. It would, however, require NSHE to spend its own money on supplemental benefits. The issue then becomes whether 1. NSHE wants to spend between $5 million and $15 million of its aggregate $1.2 billion budget on a supplement to bring health coverage for faculty and staff up to a minimally acceptable standard, and 2. there would be negative political consequences for the System for doing so that might outweigh the negative consequences for its staff of not doing so.
PEBP board update: Middle tier of coverage to be considered this Thursday
This Thursday, December 15, the Public Employees Benefit Program governing board, composed of gubernatorial appointees, will hold its regular monthly meeting (for agenda, backup information and links to view or listen to the meeting, click here). As part of this meeting, the PEBP board will consider adopting a "middle tier" of coverage option for next year. Such a "middle tier" would be more comprehensive than both the new (and much-maligned) "consumer-driven" plan – which offers choice of doctors but limited coverage until a high deductible has been met – and the health maintenance organization – which charges lower fees for each service, but charges higher premiums and offers limited choices. The proposed "middle tier" would restore deductibles to near-2009-2010 levels ($500 per year for individuals and $1,000 per year for families) and fixed-cost co-payments for office visits ($15 for a primary care visit, $25 for a specialist, $45 for urgent care). It also would restore low, set-priced fees for generic drugs ($4 for 30 days supply) and reduce co-insurance costs to 10 percent for many services. On the other hand, participants in this plan would not be eligible to contribute to a Health Savings Account, so they would receive no "seed money" to offset costs incurred during the year. Moreover, the premiums are likely to be much higher – and will not be known until February 2012.
As a different alternative for creating a "middle tier," PEBP will also consider offering three plan choices: two CDH plans and an HMO plan. Under this scenario, participants could choose the HMO or one of two CDH plans with differing deductible, coinsurance, maximum out-of-pocket and HSA seed money amounts. One option would offer a lower deductible option ($1,200 per individual, $2,400 per family) that would also have a lower out-of-pocket maximum ($3,000 and $6,000) and a lower co-insurance (20 percent), but would offer only $400 (individual) or up to $700 (family) in seed money to the Health Savings Account. The other, higher-deductible option would require individuals to pay $3,000 ($6,000 for families) before receiving coverage, and insureds could incur higher out-of-pocket maximums ($4,500 for individuals, $6,000 for families) and would pay a higher co-insurace rate (25 percent). However, participants would receive a higher amount of seed money ($1,100 per individual, up to $2,000 per family) and, presumably, pay a lower monthly premium.
In all cases, premium rates will not be determined until February so it is very hard to know how costly each option might be for an individual or family.