PEBB May Dip Into Reserves Next Year
Over the past year, medical costs for state employees grew 12.6 percent
November 4, 2009 --- Unless medical costs drop by 2.6 percent next year, the Public Employees Benefit Board may be forced to dip into its reserves.
Now that the state has shifted gears, moving to a self-insured health plan, it’s responsible for any costs beyond budget projections for its 103,000 employees and their dependents.
“Up to this point, if our assumptions were off, the carrier dealt with it,” said Rocky King, a PEBB board member who’s working on healthcare reform for the Insurance Division. “Next year, if we are off by even 2 percent, that’s a big amount for PEBB to take out of any reserves we have.”
A dashboard report released by Mercer Consulting revealed that medical costs for state employees grew by 12.6 percent from June 2008 through June 2009. Prescription drugs, meanwhile, only saw a 9.6 percent increase for the statewide PPO plan.
Hospital outpatient costs took the biggest jump – 19.1 percent followed closely behind by inpatient expenditures – 16.3 percent. Lab and radiology also saw significant increases of 12.6 percent.
There’s also been a huge surge -– 28.9 percent -- in the number of medical claims reaching over $50,000, which resulted in a 33.5 percent jump in costs -- $105,946,574 for 925 people.
In 2010, PEBB is relying on a 10 percent trend for medical costs and 8 percent for pharmaceuticals.
That’s why King is keeping his eyes on the utilization and cost trends, both generally and for claims over $50,000. “I want to zero in on utilization and cost trends and not just report them but report them against the projections,” he said. “We need to make decisions earlier rather than later if we need to make changes to benefits. Those types of changes can be a challenge administratively and politically.”
This dashboard tool, a work in progress, allows PEBB staff and board members to determine what kinds of trends and information to review on a monthly and quarterly basis to stay on track financially.
Nov 4 2009