2. Reduce premiums on all PEBP participants to reverse the alarming increase in the number of our colleagues declining coverage altogether.
3. Address the alarming increase in HMO premiums for southern Nevada.
Included in that one third are our colleagues among the classified state workforce on NSHE campuses. For these workers, a majority of whom earn less than $50,000 per year, the sharp increases in out of pocket up-front costs resulting from the conversion to a high deductible plan (an increase of several thousand dollars per year for some families) have forced a sharp increase in the number foregoing care, either by opting out of insurance altogether or by declining prescribed cure ,especially by reducing medical dosages below prescribed levels to cut costs.
The impact of the conversion of the PPO to a high-deductible plan, accompanied by a sharp increase in premiums and in co-insurance, and the sharp increase in premiums for HMO enrollees (especially in the south, where rates increased more sharply due to the blending of subsidies) has had a well-documented, negative effect on our workforce. The UNLV survey of faculty and staff conducted in November found that in addition to an unacceptably high 3.2% of workers who declined medical insurance entirely due to costs, over 60% of those who are covered reported either skipping prescribed medications or taking medications less frequently than doctor's orders to reduce out-of-pocket expense.
Lest one think this is merely a matter of faculty and staff cutting back on vanity care, our survey identified three instances of faculty or staff skipping prescribed insulin to control diabetes because they could not afford the cost of either the insulin pump or of the insulin itself at the end of the pay period.
We have therefore urged -- and continue to urge the Board -- to consider a "middle tier" plan, if not for FY13 than for the next biennium, that would allow participants to better anticipate (and budget for) the out-of-pocket cost of medical care through a separate prescription drug deductible and fixed co-pays for doctor's visits.
When an enhancement of coverage options was first suggested to the Board last fall, the response was that modifications to plan design would not be financially feasible or would come at such a high rate of participant premium as to be unviable. However, it appears from the program's last two quarterly financial reports that in actual cash terms, the program is accruing money to its reserve rapidly. Whereas last spring, during the 2011 legislative session, PEBP staff told a legislative committee that if the plan did not switch from a conventional PPO model to a high deductible plan, participant overutilization would drive the program to lose approximately $80m in the 2011-2013 biennium. However, it now appears that at the end of the 2010-2011 plan year, when we abandoned the conventional coverage paradigm, the plan had accrued between $20m and $43m in excess reserves -- above those necessary to meet the cost of care incumbered not but not yet claimed and of catastrophic claims. As of September 30, 2011, the plan had an excess reserve of $43, some $32m above that which PEBP had projected for the legislature in its work program.
And the most recent financial report reports that while the projected end-of-year excess reserve is down to $29.8m (due to the loss of an anticipated $12.5 in federal grants, not due to any increase in claims or coverage), the actual available reserve is up to $55 -- some $44m above what was projected in the budget submitted to the legislature. That is quite far to miss the mark and participants really do deserve an explanation.
Even more so, we deserve health coverage, which is the primary mission of the program, not the controlling of costs or the accrual of reserves. The state has allocated money for health coverage, participants have dutifully paid their premiums and deductibles, and the program appears to have netted at least $10m last quarter. Moreover, next year the program will receive a sharp increase in employer-side contributions, representing an increase in revenue of over 10% (over $30m statewide).
So between this excess reserve of over $40m currently and an increase in revenue of over $30m for FY13, we are urging the Board to lower premiums for all participants and enhance HSA contributions.
A final thought. We are aware that the staff is disposed not to alter the current plan design in order to see how it works out over the course of the 2 year biennium. From a scholarly standpoint, we understand this interest in carrying an experiment through to its conclusion. However, the mission of PEBP is not to show how to get us to use less care; it is to provide to the best of its ability and resources the care we actually do need.
That need is clear, the resources are available, and the time is now. We urge the board to commit to reducing out of pocket costs and enhancing coverage options for next year.