State workers and their family members would see their main out-of-pocket health care costs double next year under proposed budget cuts officials will take up Tuesday.
The state Department of Employee Trust Fund’s Group Insurance Board is expected to vote on the proposal, which would satisfy requested cuts to worker benefits in Gov. Scott Walker’s proposed budget.
The changes, which include increases in co-payments, deductibles and drug costs, could help the state avoid an Affordable Care Act “Cadillac tax” beginning in 2018, officials said.
However, the proposal would also introduce an aspect of the federal health law that was so controversial it was dropped: consultations about end-of-life care, which some called “death panels.”
Self insurance, a controversial model in which the state would pay benefits directly instead of buying insurance from 18 HMOs, is not part of the proposal, but it is being considered for 2017.
The changes to be considered Tuesday would cut $85 million over two years from the $1.4 billion health insurance program that covers 240,000 state workers and family members, most of whom live in Dane County.
Workers’ premiums, as a percentage of overall health care costs, would not change.
But co-payments, deductibles and out-of-pocket limits would go up, resulting in a doubling of those costs for nearly all state workers, according to Segal Consulting, an Atlanta-based firm hired by the state. Those costs, however, would remain among the lowest in the region, Segal said.
Lisa Ellinger, insurance administrator for Employee Trust Funds, said in a report to the Group Insurance Board that the cuts would meet Walker’s budget goals and help the state escape the “Cadillac tax” on rich benefit programs.
But Marty Beil, executive director of AFSCME Council 24, which represents state workers, said the health care cuts are another blow to workers who have already absorbed benefit cost increases and the loss of nearly all collective bargaining power.
“Workers continue to have stagnant wages, yet at the same time are facing benefit increases of significant amounts,” Beil said. “When do we break this crazy philosophy that we have to do less than our neighbor?”
Most of the proposed savings, $52 million, would come from increasing out-of-pocket limits and introducing deductibles for the vast majority of state workers who don’t have them.
Out-of-pocket limits would go from $500 to $1,000 for single coverage and $1,000 to $2,000 for families. Deductibles would be $250 for single coverage and $500 for families.
Another $24 million would be saved by replacing a 10 percent coinsurance model with co-payments of $15 for regular doctor visits and $25 to see specialists.
Some $12 million in savings would result from increasing the patient cost of prescription drugs from a maximum of $50 to a maximum of $200.
End-of-life care consultations, also called advanced care planning or palliative care, would save $292,500. Payment for such consultations was dropped from the Affordable Care Act after former vice presidential candidate Sarah Palin and other Republicans criticized them as “death panels.”
Some of the proposed changes to state worker benefits would cost money, such as increasing the state’s contribution to health savings accounts from $170 to $750 for single coverage and $340 to $1,500 for families. That could encourage more people to sign up for high-deductible health plans, officials said.
Other possibilities the 11-member Group Insurance Board might consider — covering weight-loss surgery and covering habilitative services, which help people gain or maintain a new function — would also increase costs.
The changes, proposed by Employee Trust Funds staff, mirror Segal’s preliminary recommendations in March.
Walker’s proposed budget called for a $25 million reduction in state money over two years in state worker health benefits. That means a $54 million cut in all funds, Ellinger said.
Walker’s budget also counted on $27 million in overall savings by giving $2,000 to workers who opt out of state insurance.
But Segal said the opt-out program would save little or no money, so Employee Trust Funds found savings elsewhere.