SEHBC Rates Increase 5.7% On Average Next Year
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July 15, 2010
A consultant to the State Health Benefits Commission, Aon Employee Benefits Consulting, told the Commission July 13 that school districts will face an average rise of 5.7 percent in health insurance benefit costs next year. Municipalities will pay an average of 11.7 percent more for benefits next year. State government will experience an average 6.9 percent increase in costs for health benefits, while dental plan costs for all government levels should rise 1.9 percent.
The cost increases will be broadly felt: 355 school districts and charter schools are enrolled in the state system as well as 677 municipalities, counties and authorities.
Increases will vary by governmental unit and will depend on which specific insurance carrier that employees choose and how many are enrolled. The plans cover employees and retirees.
School cost increases are lower because of local layoffs and some enrollees dropping off because they now must pay a portion of their salary toward their health benefits, the consultants said.
How much in premiums employees pay toward their own health benefits are subject to contract negotiations. Legislation enacted in March (P.L.2010, c.2 (S-3)) requires school and municipal employees to pay at least 1.5 percent of their salary toward health benefits when new contracts take effect.
State officials said they did not know how much local governments would save this year or next by having employees contribute more.
An estimate by the nonpartisan state Office of Legislative Services pegged savings at more than $300 million when the law is fully implemented.
The Commission will vote on the recommendations next week.
Recommendations
While the recommendations were not made public, the meeting included a discussion of how to get enrollees to ask to use generic drugs and whether the state should charge higher premiums to enroll their entire families.
School and municipal employees pay $10 for brand-name prescription drugs and $3 for generic drugs, well below that paid by private-sector employees. The consultants also discussed increasing premiums for employees.
If the state commissions were to adopt recommendations for changing benefits and cost-sharing, they would only take effect through contract negotiations and state legislation.
2.0 Cap Compromise Interplay
The increase in health benefits costs are outside of the recently approved 2 percent statutory cap on property tax levies. (Governor Signs “2.0% Cap Compromise” Into Law July 13, July 13, 2010).
The new cap, initially announced by the Governor and Senate President in a press conference July 3, consists of a 2 percent cap on property tax increases, but carves out exceptions for healthcare costs, pension costs, rising school enrollment, debt service, capital expenditures and emergency allocations. (Governor & Senate President Reach Cap Compromise July 3, July 3, 2010)
Schools and towns would have to ask voters for approval to raise taxes above the limit, with a simple majority needed for approval.