State workers, retirees face higher health care costs
State employee unions are fed up with Gov. Jack Markell.
The latest source of unrest: the governor's proposal to raise employee health care costs while offering no general pay increase for state workers in his $3.9 billion budget.
Delaware state workers and retirees could face $1,000-deductible increases and higher co-pays for specialist visits, hospital stays and prescription drugs to help close a $60 million health plan deficit, according to administration proposals submitted to the State Employee Benefits Committee.
Another proposal would reduce benefits for pensioners on Medicare by implementing 5-10 percent co-insurance provisions in Delaware's Medicfill plan, a change that would result in new out-of-pocket health care costs for seniors.
Top state officials have even discussed eliminating coverage for erectile dysfunction pills, a benefit used by 3,413 health plan members, to save $2.7 million.
Delaware's benefits committee is scheduled to vote by March 20 on the changes. The eight-member panel includes three Markell Cabinet secretaries, including Office of Management Budget Director Ann Visalli, who chairs the committee. Public employee unions occupy one seat on the panel.
More than 121,000 would be affected by the higher costs, including state employees, retirees and their dependents.
"This is ridiculous. This governor has done nothing but take us backwards," said Mike Begatto, executive director of the Delaware chapter of the American Federation of State, County, and Municipal Employees. Begatto represents 3,700 state employees, including correctional supervisors, nurses, transportation workers and food service employees.
"We're organizing every day because of this kind of thing the governor is doing. This is unheard of," Begatto said of Markell.
In many ways, state health insurance remains a good deal for workers. Taxpayers pick up the vast majority of the premium cost for state workers, with the state's share ranging from $578 monthly per employee to $1,548.
Employees, under 2016 rates, will pay $24 to $236 monthly depending on the plan they select and whether it also covers family members.
State workers also have been allowed to select plans without deductibles, limiting upfront out-of-pocket costs. Though that's likely to change with Markell's new proposals, which would institute deductibles on all state health insurance plans.
Administration officials say higher deductibles and co-pays are now necessary because of a surge in unexpected costs to the Delaware health plan.
Delaware contracts with Highmark and Aetna to offer insurance plans, but is self-insured, meaning the state accepts risk and foots the bill for medical claims.
Claims cost rose from $594.7 million in fiscal year 2013 to $664.3 million in fiscal year 2014, an 11.7 percent increase for the year ending last June 30. That number is expected to climb again this year to $714.2 million.
The state experienced higher-than-expected bills for specialty and compound drug claims, and high-cost medical claims. Delaware's cost per member, per month has risen from about $300 in mid-2011 to around $340.
By June 30, administration officials anticipate the state will blow through more than $70 million in reserves, leaving the health plan broke.
Markell, in his budget proposal, contributes $26.1 million to cover higher health care costs – and the state spends more than $360 million to provide health benefits for its employees, a spokesman for the governor said.
Markell spokesman Jonathon Dworkin said higher state health care bills are "another example of why the rising cost of health care is unsustainable. The governor is concerned about what that means for state employees and every Delawarean."
Changes in deductibles are the biggest-ticket item among the proposals being considered. Administration officials say they could save $41.2 million by making changes.
Workers enrolled in the First State Basic Plan would see individual deductibles rise to $1,000 from $500. The family deductible would rise by $1,000 to $2,000.
Workers in the higher-deductible consumer-directed gold plan would see family deductibles rise from $3,000 to $4,000. Those enrolled in the HMO and PPO plans would see new deductibles of $500 for an individual or $1,000 for a family.
Out-of-pocket maximum spending levels would be set at $4,500. Specialist co-pays also would be raised $10 to $30, and co-pays for hospital stays would rise to $150 daily up to a maximum o $450.
Prescription co-pays would rise by as little as $1.50 for a 30-day supply of a generic drug or by as much as $35, to $125, for a 90-day supply of non-formulary drugs.
On Facebook, the Correctional Officers Association of Delaware detailed some of the proposed changes, calling on its members to contact legislators to express their opposition. The association's post said the changes would serve to reduce the incomes of state workers and retirees.
"It just feels like they are coming up with a quick solution that is not equitable to everybody," said Geoff Klopp, who represents 1,600 correctional officers as president of the association. "It doesn't feel right."
Contact Jonathan Starkey at (302) 983-6756, on Twitter @jwstarkey or at jstarkey@delawareonline.com.