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Thursday, April 24, 2014

Govt exploring options amid rising health insurance costs

The Commonwealth government is grappling with increased health insurance costs and limited revenues as it attempts to provide employees and retirees health insurance for fiscal year 2014.

The CNMI government’s health insurance cost for fiscal year 2013 was approximately $18 million, while initial cost estimates for fiscal year 2014 increased by 43 percent to approximately $25 million. The CNMI cannot afford this increase and must figure out a way to restructure the program to continue to provide affordable health insurance benefits.

A review of the government’s health care costs indicates the increase is predominantly driven by the cost of insuring retirees. The $18 million in total cost can be separated into $14 million in costs for retirees and $4 million for all active employees who are enrolled. The health insurance policy requires the government to pay half of the premium and employees and retirees pay the other half.

The current cost for a single employee under the current plan is $178.64 a month, which would face an increase of $78.62 for a total of $255.46 per month. Similarly, a family with two dependents paying $571.62 a month would see a $245.80 increase to $817.42 per month for continuing coverage. The CNMI has to carefully examine the cost structure of the current insurance plan. The objective is to meet the essential health care needs of our community and eliminate or curtail secondary benefits. The government has to develop a health care insurance model that is specifically structured to the people’s needs essential needs.

The problem of rising health insurance costs is further complicated by the fact that many active employees are choosing not to participate in the government-sponsored health care program. As total costs for the program increases, there is a corresponding increase in the premium the employee must pay. Because active employees require less medical care, they can often find alternatives to the government-sponsored health insurance program that are less costly, even if the government pays for half of their premiums. As active employees leave the government-sponsored health insurance program, it causes a shift in the health insurance population to a larger percentage of retirees, who are more costly to insure but who cannot afford these ever increasing costs.

In reviewing the various health care insurance models, one proposal being considered is to limit health care benefits to services provided in the CNMI, Guam, and the Philippines or select U.S. providers. Cost data shows that health care services in the CNMI, Guam, and the Philippines are significantly lower than those provided in the mainland United States. In examining this issue, if we can limit where care is provided and still meet the medical needs of the majority of participants, we can cut overall costs. This is a delicate balance as there are CNMI retirees spread out all over the world, although the vast majority are in the CNMI. The latest health care insurance data indicates that there are a total of 2,267 enrollees, 2,059 of which are located in the Commonwealth and 208 of which are spread throughout the world.

The latest health care insurance proposals submitted to the government shows the cost of providing health insurance coverage to the 208 participants living outside the Commonwealth presents a significant cost that is driving rate increases. One proposal that is being considered by the government is to require persons living in the U.S. mainland to enroll in the U.S.-sponsored health care exchange programs because they would be more affordable to retirees. None of the proposals submitted provides for a continuation of the current benefits at the same rates.  All of the proposals call for cost increases and reduced benefits.  The CNMI will work to develop a health insurance model that provides essential services to all at an affordable rate and this is almost an impossible goal.  Key officials are looking at different models, but they all will require changes in the current system.  Due to the pending deadline for expiration of the current health insurance plan, the Government is intending to make a decision at the end of this week. (Office of the Governor)

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