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NFA testimony to PEBP on CDHP plan design changes

29 Nov 2017 2:12 PM | Deleted user

The following testimony was provided to the PEBP Board by NFA Legislative Liaison Kent Ervin, on behalf of NFA:

The Nevada Faculty Alliance (NFA) is the statewide association of faculty at all eight NSHE institutions, most of whom participate in the Public Employees’ Benefits Program along with other state employees. We are the state affiliate of the American Association of University Professors.

Thank you again for your hard work in managing our health benefits program. With the CDHP plan, we again see a situation of unallocated reserves well in excess of the actuarial prediction. While that is certainly more pleasant to deal with than a shortfall, it means that the CDHP participants have not received all the benefits that they could have received with the level of funding from both employee and employer contributions. While retroactive changes are not possible, the excess reserves need to be used to “pay back” equitably those participants that helped create it.

The Nevada Faculty Alliance recommends the following priorities for use of excess reserves, highest priorities first, beyond continuing existing PY18 plan features and the recommended cost-containment strategies (which we support):

1) Employee contributions to CDHP premiums should not increase in dollar amount for FY19 over FY18. An unknown amount might be needed for rate stabilization.

2) Maintain/restore the $2-per-month contribution for retirees on the Medicare Exchange. The Exchange retirees are the only group who were not taken care of at all with legislative action in 2017, and they have arguably contributed to the build-up of the reserves by removing higher risk older individuals from the CDHP risk pool. Estimated cost $5.43M. Continuing this funding needs to be a high priority request at the next legislature.

3) Add the preventive 3D mammography, at the low cost of $0.22M, as a base plan feature.

4) Reduce the deductible and maximum out-of-pocket cost for CDHP participants. This helps most those who actually have high health care needs during the plan year (as opposed to increasing the HSA/HRA contribution for everyone). Specifically, we recommend reducing the deductible to the IRS minimum for a HDHP of $1350 (individual, double for families) and reducing the maximum out-of-pocket cost from $3900 to $3000, for an estimated total cost of $6.92M. The deductible would increase with the IRS minimum in future years, the out-of-pocket could be kept to at least twice the deductible, and this is one of the easiest design features to adjust in case of future shortfalls.

5) Restore a vision benefit, at a maximum estimated cost of $1.22M assuming 100% utilization. Workers and retirees need good, fully-corrected eyesight to do their jobs and live comfortably. This should be a base benefit.

6) Use the remainder of excess reserves to increase HSA/HRA contributions as a one-time spend-down. A $300/year increase in the HSA/HRA would cost $7.09M. We prefer the no-strings-attached option because future funding for a matching program is uncertain. It could be delayed until January 2019 in case of unanticipated contingencies.

That represents a total of $20.88M, which roughly matches the available funds, not including rate stabilization if required.

Thank you for the opportunity to provide this input. 

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