Premium coverage, little cost

Sunday, May 15, 2011 

What employer today offers family health plans with $4 copays to see a specialist, $6 copays for brand name drugs, $25 emergency room copays, no hospital copay or in-network deductible with employee contributions of less than $70 a month?

Pennsylvania's Legislature is the answer.

The Senate's choices include a medical and drug plan that costs more than $30,000 a year per employee with taxpayers picking up nearly all the premiums for the 360 employees enrolled.

House employees can pick among four medical plans, and haven't contributed toward the premiums, but will begin to contribute 1 percent of their salary later this year. Among the choices is a family plan that costs more than $20,000 a year when drug benefits are included.

The General Assembly's health benefits left insurance experts and benefits consultants nearly speechless. Such generous plans with low contribution rates do not exist in private industry.

"These numbers are just crazy," said Ross Schriftman of Ross Schriftman Insurance in Horsham. "This is really a way, way higher cost to the taxpayer than is really necessary."

Tom Getzen, a professor of risk, insurance and health management for Temple University's Fox School of Business, agrees. "Nobody costs that much. That is a very sweet contract."

Consider that federal employees pay more toward their health premiums. So do employees in most states.

The Legislature's benefits are even better than executive branch employees - including the governor - who have higher contribution rates for cheaper plans with slightly higher cost-sharing.

While private and many public employers are requiring workers to contribute more out-of-pocket money for health coverage, Pennsylvania's Legislature - which faces a $4 billion budget shortfall - has made virtually no changes to its medical plan designs in recent years. And the changes that were made mostly involved expanding coverage.

Technically, the Legislature's health benefits are decided by 14 lawmakers who serve on the Senate Benefit Structure Committee on Management Operations and the House Bipartisan Management Committee. The top nine and five Senate and House leaders, respectively, sit on the committees.

But at least two House lawmakers - a Bucks County Republican and a Luzerne County Democrat - believe the General Assembly needs a reality check. Each has introduced bills that would bring employee contributions more in line with what the average American pays.

"We should be contributing and contributing at the real world rate and that is not what we're doing," said Bucks County Rep. Frank Farry, R-142, whose bill would raise contributions to 20 percent of plan premiums over a 10-year period. "We are elected leaders. We need to lead by example."

High-priced plans

Under the current medical benefits contracts, annual premiums for medical and drug benefits combined range from more than $4,300 to more than $31,000 per state employee, depending on the chamber, the type of plan and the number of dependents. The totals do not reflect additional subsidized costs for dental and vision coverage.

All the plans include low employee cost-sharing, few restrictions and coverage for things like autism care services, infertility treatment and adult dependents until age 29.

The Preferred Provider Organization plans are the most popular with both chambers' employees, according to chief clerk responses submitted under Pennsylvania's Right to Know. But about one-third of all Senate employees and more than one quarter of House lawmakers are enrolled in indemnity plans, the most expensive choices.

Only two representatives and one senator do not take health benefits, according to the chief clerk offices.

All the options are expensive - for taxpayers - since contributions are tied to employee's salary rather than plan premiums, the standard that public and private employers commonly follow.

Senate employees and retirees started 1 percent premium contributions just four years ago. House lawmakers' 1 percent contributions don't kick in until July 1, with employees and retirees being required to contribute before the end of the year, House GOP leadership spokesman Steve Miskin said.

This year, the base salary for lawmakers is $79,623, also considered among the highest legislative salaries in the nation. Many lawmakers, though, did not take the automatic Cost of Living Adjustment and left their salaries at $78,314.

The 24 leadership positions pay extra, and the highest salaries are for the House speaker and Senate president pro-tem, who each earn $122,254 a year.

That means, once the House contributions start, most state lawmakers will pay less than $800 a year for their health benefits, which is less than the monthly premiums for most of the current plans.

Bucks County Rep. Steven Santarsiero, D-31, has voluntarily paid 1 percent toward his PPO family plan premiums since he took office in 2009.

Santarsiero said the 1 percent contribution is a start to bring the House in parity with the Senate; he also supports two House bills that would raise employee contributions to 10 percent or 20 percent of premium costs.

"We're paying far less. I think that is not right," Santarsiero added. "We should be paying more and we have to do our part. This all goes to where the Legislature can be saving money and cutting back."

changing times

Historically, public workers have received generous health benefits as a job perk, but Pennsylvania stands out even among other states.

In 2009, the average annual cost for an individual health plan for a public employee was $6,029 with the state paying an average of 89 percent of the premiums, according to the National Conference of State Legislatures.

The average family plan premium for state employees in 2009 was $13,992, and the average employee paid $2,324 - nearly 17 percent - of that cost, according to the Center for Financing, Access and Cost Trends at the U.S. Agency for Healthcare Research and Quality.

In many states, the legislative branch is treated the same as other public employees, said Richard Cauchi, health program director for the National Conference of State Legislatures. South Dakota and Wyoming do not offer health benefits to state lawmakers, but do cover their staffs.

In recent years, states have increased employee cost sharing, including contribution rates, but change is often incremental, Cauchi added. A state may lock into multi-year insurance contracts to limit cost increases, and employee collective bargaining agreements are often longer than one year.

To reduce costs, more states are pushing employee wellness programs, which provide incentives for leading healthy lifestyles, Cauchi said.

Pennsylvania's executive branch is among them, with about 53,000 employees - about three-quarters of those who receive health benefits - participate in a wellness program, said Dan Egan, press secretary for the Pennsylvania Office of Administration.

Participants complete an online health assessment and, based on the responses, are deemed healthy, at-risk or chronic. Employees in the latter two categories participate in telephone-based disease management programs, Egan said.

Since 2005, Pennsylvania's executive branch employees have contributed 3 percent of their salary toward health premiums. Employees hired after 2003 also pay a "buy-up" charge ($636 individual/$1,610 family), if they enroll in the PPO plan.

But employees enrolled in the wellness program cut their premium contributions in half, Egan said. Overall, executive branch employees contributed about 8 percent toward the $781 million annual health benefits costs last fiscal year.

old resistence

The Senate and House chief clerks declined to provide specific information about what changes are under consideration to reduce health costs.

The chief clerks serve as non-voting members on the benefit committees.

In the House, two medical benefits contracts - Capital Blue Cross, which covers most current and retired employees, and the Keystone Central HMO - expire in July 2012. The other legislative medical contracts expire this July.

The newspaper was unsuccessful in reaching House and Senate leadership members for interviews, after repeated requests through emails and voice messages left with their press secretaries.

The Bipartisan House Committee is "checking alternatives" to its University of Pittsburgh Medical Center HMO, but it's unclear if the plan will be renewed, said House Chief Clerk Anthony Barbush. The plan has 19 employees enrolled at a cost of $149,000 this year.

The House committee has started negotiations in anticipation of its 2012 renewal, and higher employee premiums and cost-sharing are on the table, GOP spokesman Miskin said.

The Senate has discussed combining the House and Senate medical benefits, the way it was done years ago, but, so far, it has been cheaper to go with separate contracts, Senate Chief Clerk Russell Faber said.

A review of the contracts, though, shows the Senate indemnity plans with drug coverage costs nearly $11,000 more a year than the House's indemnity plan. With PPO plans, there is a less than a $300 difference between the chambers for individual and family coverage.

The Senate management committee is considering a "variety" of health benefit changes, Faber said. The committee has analyzed the potential cost savings if it increased premium contributions and copays and other benefit design changes it might want to consider.

But he declined to provide a copy of the study or discuss its conclusions.

Jo Ciavaglia can be reached at 215-949-4181 or jciavaglia@phillyBurbs.com For the latest health information follow Jo on Twitter at twitter.com/jociavaglia