COLUMBIA — South Carolina's insurance plan for public employees expects to spend about $70 million to provide the preventive services that federal health care law requires insurance plans to offer at no out-of-pocket cost to workers.
While workers and retirees won't pay at the doctors' office, they will pay elsewhere, said Stephen Van Camp, director of employees' insurance program.
State actuaries estimate the required services will cost between $65 million and $75 million to provide, likely starting in 2014, Van Camp told a retirement advisory panel on Thursday.
The health care law passed by Congress requires insurance plans provide – without co-payments and regardless of deductibles – services that include immunizations, contraception and screenings for high blood pressure, cholesterol, and breast, cervical and colorectal cancers. The idea is that such services reduce health care costs over the long term.
For example, catching high blood pressure early will hopefully prevent a host of health problems.
“That's what the hope is,” Van Camp said. “It's an investment – one we're forced to make by the federal government.”
But when and whether those savings would be realized is unknown, he added.
What is known, he said, is that the upfront cost to the state health plan will require either increased premiums or benefit changes, or some combination. That could include reducing other benefits and increasing deductibles.
The state plan covers 234,539 public workers and retirees, plus their spouses and children. The changes don't start immediately because of a grandfathering provision in the federal law, for which the state plan will probably no longer qualify in 2014, Van Camp said.
An additional $70 million would increase the plan's total cost by less than 5 percent.
Claims tallied about $1.6 billion last year, though the numbers keep rising, Van Camp said.
Currently, those insured under the state's standard health plan must meet a $350 deductible before any health costs are covered. After that, employees and retirees foot 20 percent of the bill for most services. However, physical exams sometimes offered at the workplace cost $15.
Starting Jan. 1, health care premiums for state workers and retirees will increase 4.6 percent. Their current rates for the standard plan range from $98 a month for a single, non-smoking worker to $366 monthly for a family with a smoker in the household.
The increase is due to a vote earlier this month by the Budget and Control Board. Gov. Nikki Haley convinced a 3-2 majority of the board to split the cost of premium hikes between workers and employers, even though legislators had fully covered the hike in the state budget.
A lawsuit challenging the board's authority to ignore the budget is before the state Supreme Court. The state employee and teacher groups suing have asked the state's high court to take the case directly.
Haley has repeatedly said that workers should have some “skin in the game,” and it's only fair that taxpayers not fully fund public workers' health care bills.
In South Carolina, employers – which include state agencies, public colleges, school districts and local governments – pay 73 percent of premiums, while workers foot 28 percent. Employers' rates – the part paid by taxpayers – rank fourth lowest among the 50 states' insurance programs for public workers, while the rates paid by employees and retirees rank 16th highest nationally, Van Camp said, citing a national survey.
The total, when combining what employers and workers pay, ranks third lowest nationally.
Since 1999, premiums have increased in all but two years. Employers footed the whole bill in six of the 14 years that costs increased, while employees and retirees paid the full cost in two of those years, according to the Public Employee Benefit Authority.
Employees' rates increased by double digits in 2001 (by 10 percent), 2002 (by 23 percent), 2003 (by 37 percent), 2004 (by 28 percent), and 2005 (by 30 percent), according to the agency.
While the state's done well in comparison to other states, the state must do more to cut costs, said the agency's executive director, Bill Blume.