Health insurance premiums for government employees and retirees could go up by 30 percent to 45 percent as early as Jan. 1, 2014, unless the government finds innovative ways to keep the costs low, Gov. Eloy S. Inos told lawmakers yesterday.
The anticipated increase in health insurance premiums was among the topics of discussions at the governor and Lt. Gov. Jude U. Hofschneider’s meeting with members of the House and Senate yesterday, along with needed changes to both the pension obligation bond and Commonwealth Development Authority laws.
Inos said right now, the premium paid to service provider Aetna is around $18 million.
Half or $9 million of that is paid by the employer/government and the remaining $9 million is by government employees/retirees.
“Of the $9 million that the employer pays, about $7 million is attributed to retirees, about $2 million is for active [members],” the governor said in an interview after his closed-door meeting with lawmakers.
Aetna, the current provider for the government health plan, did not bid on the latest request for proposals. Two other insurance firms did.
The government’s existing agreement with Aetna will expire on Dec. 31.
“Based on what’s proposed, [there’s] between 30 and 45 percent increase [in insurance premium],” the governor said after the meeting.
One estimate for healthcare benefits received, for example, would increase premiums by 43 percent, which would increase total annual costs from approximately $18 million to $25 million.
The expected insurance premium hikes pose an additional challenge to the government that now also has to pump money into the global Retirement Fund settlement agreement and restore 25 percent of retirees’ pension, as well as continue to pay employer contribution for health and life insurance.
In the leadership meeting, the governor and lawmakers discussed revenue-generating bills that could help cushion the impact of an insurance premium increase, among other things.
Moreover, the administration is looking at the impact of the Affordable Care Act or Obamacare on health insurance premiums in the CNMI.
“I emphasized the importance of addressing these issues right away,” Inos said of yesterday’s meeting with lawmakers.
One of the ways to deal with the issue, he said, is coming up with “variations in terms of coverage.”
“One way would be to see how we can get everybody in government under one program so we can spread the cost on a bigger and wider base,” Inos said.
He said there are many things to consider: contract terms, increased premiums, deductibles, preexisting conditions consideration, the type of services covered.
House Speaker Joseph Deleon Guerrero (Ind-Saipan) separately said that based on information provided at the meeting with the governor, if Aetna were to rebid, “they would charge us significantly more than what they are charging now.”
“The administration is negotiating and looking at all the different options. They are consulting right now with the various bidders on what could be the options,” he said.
On Nov. 6, administration officials met with health insurance providers to discuss the current request for proposal for the provision of healthcare insurance benefits starting Jan. 1, 2014.
The anticipated increase comes months after Aetna renewed for year 2013 its health insurance agreement with the Retirement Fund, with some 18 percent reduction in premiums.