CNMI Government Health Insurance Contract Extended

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Extension by Aetna incorporates 40 percent rise in premiums

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Dec. 27, 2013) – Gov. Eloy S. Inos said yesterday that the CNMI government entered into a one-month contract extension with Aetna for government health insurance with some 40-percent increase in premiums. Aetna’s contract was supposed to expire on Dec. 31, but this has been extended to Jan. 31.

"40 percent," Inos told Saipan Tribune, when asked about the increase in health insurance premiums.

Without this contract extension, more than 2,000 individuals would be left without health insurance until the government signs a new agreement with another firm.

"They [Aetna] agreed to do the one-month extension but on the new rates… Right now they’re trying to do a variation on the rate depending on the options available," Inos said in an interview at the swearing in of Edith DeLeon Guerrero as CNMI Labor secretary on Capital Hill yesterday morning.

Aetna did not bid on a government request for proposals (RFP) for health insurance coverage. Two other insurance firms did.

Inos said yesterday that StayWell already "withdrew," while Calvo’s SelectCare is "still in the running."

However, the governor said this does not necessarily mean that SelectCare would bag a contract with the CNMI government because a new RFP may be issued.

"Because of the scope of the services that we’re looking at and the jurisdictional coverage plus the type of the service that we really want at the minimum, it’s very likely that we will issue a whole new RFP," Inos said.

Weeks back, the governor said health insurance premiums for government employees and retirees could go up by 30 percent to 45 percent as early as Jan. 1, 2014, because of rising costs of healthcare. There might also be possible impacts of the Affordable Care Act or Obamacare on health insurance premiums in the CNMI.

At the time, one estimate for healthcare benefits received would increase premiums by 43 percent, which would increase total annual costs from approximately $18 million to $25 million.

This increase adds to the millions of dollars that the government needs to come up with in fiscal year 2014, along with other obligations such as to the Retirement Settlement Fund and the restoration of the 25-percent cut in retirees’ pension.

Lawmakers said they will continue to work on revenue-generating bills, following the signing into law of video lottery and electronic gaming.

The governor said yesterday that the government is revisiting the health insurance program.

"For now, we just have an agreement to extend Aetna for one month as we look into other alternatives. Whatever the outcome will be on this whole project, we believe that there will be an increase in the premium and that’s also a concern and we’re looking into it because of the question of affordability," Inos said.

He said the government wants to make sure that the health insurance contract it enters into is, "at the minimum, addresses many of the concerns that especially retirees have, because they’ve got more need for more frequent hospitalization and things like that, plus the geographical coverage, not just here, in Guam but also in the Philippines, in the U.S. mainland and the kind of network that’s available in those areas. So we’re looking for the best possible option."

The increase in premium or the rate itself is a function of many factors, but "primarily a factor of the amount of deductible and the services to be provided, and the geographical area," Inos added.

In fiscal year 2013, the CNMI government’s health insurance cost was approximately $18 million, while initial cost estimates for fiscal 2014 increased by 43 percent to approximately $25 million.

Because the CNMI cannot afford this increase, it must figure out a way to restructure the program to continue to provide affordable health insurance benefits.

The administration earlier said the current cost for a single employee under the current plan is $178.64 a month, which would face an increase of $78.62 for a total of $255.46 per month.

Similarly, a family with two dependents paying $571.62 a month would see a $245.80 increase to $817.42 per month for continuing coverage.

In reviewing the various health care insurance models, one proposal the administration is considering is to limit health care benefits to services provided in the CNMI, Guam, and the Philippines or select U.S. providers.

Cost data shows that health care services in the CNMI, Guam, and the Philippines are significantly lower than those provided in the mainland United States.

In examining this issue, if the CNMI government can limit where care is provided and still meet the medical needs of the majority of participants, it can cut overall costs. This is a delicate balance, as there are CNMI retirees spread out all over the world, although the vast majority is in the CNMI.

The administration said the latest health care insurance data indicates there are a total of 2,267 enrollees, 2,059 of which are located in the CNMI and 208 of which are spread throughout the world.

One of the health care insurance proposals submitted to the government shows the cost of providing health insurance coverage to the 208 participants living outside the CNMI presents a significant cost that is driving rate increases.

One proposal the government is considering is requiring persons living in the U.S. mainland to enroll in the U.S.-sponsored health care exchange programs because they would be more affordable to retirees.

None of the proposals submitted provides for a continuation of the current benefits at the same rates. All of the proposals call for cost increases and reduced benefits.

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