By Jim Saunders
3/11/2010 © Health News Florida
With Florida lawmakers trying to rein in employee-benefit costs, two major insurers have offered a way to shift more responsibility for health care to state workers.
Blue Cross and Blue Shield of Florida and UnitedHealthcare of Florida told members of the top Senate budget committee Wednesday that the state could use a combination of high-deductible plans and what are known as "health savings accounts'' to limit state spending on employee health insurance.
The insurers did not make formal proposals, and lawmakers have not decided whether to change the benefits system. But Ways and Means Committee Chairman JD Alexander, R-Lake Wales, said the state faces continuing cost increases in the $1.6 billion health-insurance program, as lawmakers deal with broader budget shortfalls.
"We can't just keep paying 10 percent more every year,'' Alexander said.
Under the ideas presented by the insurers, employees and the state likely would pay into savings accounts that have tax benefits. Money in those accounts then could be used to pay medical bills.
The high-deductible plans would help cover major medical expenses. UnitedHealthcare, for example, used two scenarios that included individual annual deductibles of $1,250 and $2,000. Employees would be required to pay coinsurance costs, though the plans also would place maximum amounts on out-of-pocket expenses.
Both scenarios involved the state spending a maximum of $8,000 per employee. That would be less than the $9,500 that Alexander said the state is spending this year, though an exact amount of the potential savings was not presented.
The Blue Cross and UnitedHealthcare officials said employees of both of their companies use health-savings accounts and high-deductible plans. They said health-savings accounts help hold down medical costs because customers see how much they are spending --- as opposed to other types of health plans in which costs are harder to understand.
"It exposes them to the true cost of health care and will help make them better consumers,'' said Jon Urbanek, a group vice president for Blue Cross.
Doug Martin, a lobbyist and communications director for the American Federation of State, County and Municipal Employees, said after the meeting that health-savings accounts and high-deductible plans might appeal to younger workers who do not have many medical expenses. But he said the plans could involve large out-of-pocket costs for older workers with significant health problems.
Overhauling health insurance also could spur opposition from state workers, who have long argued that generous benefits make up for accepting lower pay than they might earn in the private sector.
Martin said changes could hurt the state's ability to recruit employees in fields such as nursing.
"One of the major tools the state has in recruiting personnel is its health plan,'' Martin said.
But Alexander said arguments about the need for generous benefits might not still apply, as businesses struggle financially and Florida's unemployment rate reached 11.9 percent in January.
"Over the last few years, the private sector's certainly made reductions in benefits and pay that have been more broad scale and deeper than anything we have done in state government,'' he said.
Under the state's standard health-insurance plan, employees pay premiums of $50 a month for individual coverage and $180 a month for family coverage. They are able to enroll in preferred-provider organizations (PPOs) or health-maintenance organizations (HMOs).
Roughly 26,000 employees, including lawmakers and many high-paid employees, also receive free insurance. Some received that benefit as a trade-off when they lost civil-service protections during a government shake-up led by former Gov. Jeb Bush.
House and Senate members have filed bills to eliminate that free coverage. Alexander said he supports such an elimination, saying "what's good for the goose is good for the gander.''
Martin said his union has not taken a position on such a move, but the free insurance angers some rank-and-file workers.
"Many of our workers resent the fact that they pay premiums to subsidize higher-paid management,'' Martin said.
Wednesday's committee meeting came as lawmakers get ready to draw up a 2010-11 fiscal year budget that could have a shortfall of as much as $3 billion. Any changes in the health-insurance plan likely would be part of budget negotiations.
Another possible way to save money could be eliminating HMOs as an option for state employees. A consultant issued a report in January that said such a move could save the state $118.6 million.
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--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida