Guam Governor: Retirees Will Continue To Receive Health Insurance Despite Debt

Calvo calls on legislature to appropriate sufficient funds to cover $13.8 million shortfall

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, Oct. 17, 2016) – Government of Guam retirees will continue to receive medical, dental and life insurance coverage, despite the nearly $13.8 million GovGuam still owes to its health insurance providers for Fiscal 2016, according to the governor's office and the Department of Administration.

The governor’s office is urging certain lawmakers to “stop with the drama” and change the government's budget to appropriate more funding for the insurance companies.

According to the governor’s office, DOA Director Christine Baleto has spoken to the three insurance companies, explaining the payment delay and the “need for legislative appropriation that actually provides a solution.”

In a press release, Gov. Eddie Calvo stated retirees aren’t in danger of losing their health coverage.

“I want to thank Christine Baleto for working with insurance companies to ensure they know what’s going on, thus allowing benefits for retirees to continue,” Calvo stated.

Lawmakers last fiscal year appropriated $24.2 million to the Government of Guam Employees Retirement Fund to cover retiree medical, dental and life insurance premiums, but the appropriation was $13.8 million less than what was needed.

The current budget includes a provision that allows Calvo to transfer $10 million from agency budgets and pay what is owed to the insurance companies – Calvo’s SelectCare, Moylan’s NetCare and TakeCare. However, the transfer authority is short by $3.8 million, according to the governor's office, and it will be difficult to find funds to transfer because lawmakers cut the budget  by $55 million.

“Vice Speaker Cruz slashed the Fiscal 2017 budget by $55 million. Where is the Governor going to find $10 million from agencies that already dealing with skeletal budgets?” Adelup Communications Director Oyaol Ngirairikl asked in the press release.

“The agencies Vice Speaker Cruz would have the Governor pull $10 million from include, the Department of Public Health and Social Services, Guam Behavioral Health and Wellness Center, the Department of Integrated Services with Disabilities, and other executive branch agencies (or) offices,” she added.

Rather than give the governor transfer authority to make up the shortfall, governor's Communications Director Oyaol Ngirairikl said, the Legislature should have identified a specific funding source.

“The Legislature and the vice speaker, they failed to do what the job says. Their job is to set the priorities,” she said.

NetCare Plan Administrator Jerry Crisostomo told the Pacific Daily News last week that the government owes the insurance provider more than $351,000 in health insurance premiums for government retirees for seven pay periods.

On Monday, SelectCare Plan Administrator Frank Campillo reiterated his previous statement that the company is owed a considerable amount of money for the retirees’ premiums but didn’t have the official amount on hand.

But since SelectCare covers about 85 percent of the government’s health insurance market, Campillo added, it’s safe to assume that the company is owed about 85 percent of the $13.8 million, or $11.73 million.

Since fiscal 2014, the government of Guam’s health insurance plan has been under a non-exclusive contract with three local insurance companies, giving the employees and retirees a choice in which provide to choose each fiscal year. SelectCare, NetCare and TakeCare have won the last three non-exclusive contracts.

Ngirairikl continued to note that the Cruz and the Legislature’s fiscal 2017 budget act “also fails to appropriate enough to cover retiree’s medical, dental and life insurance premiums.

“We’re going to run up this exact situation unless a real solution is found,” Ngirairikl said in the release.

The legislative body passed the latest budget bill in a 14-1 vote in late August. Only Sen. Mike San Nicolas, D-Dededo, opposed it.

The Calvo administration anticipates the retirees’ health insurance to be $35 million. The Legislature appropriated $29.86 million to the Retirement Fund for health insurance and gave Calvo another transfer authority of $5 million if needed.

Ngirairikl said the administration doesn’t expect the total amount for retirees’ health insurance to be more than $35 million, but again noted that it’s too early in the fiscal year to know for sure.

The government’s $38 million cost for retirees’ health and life insurance premiums this previous fiscal year was nearly double the cost to taxpayers in fiscal 2014 when it was about $23 million.

In 2012, lawmakers unanimously passed a measure, which Tenorio later signed as Public Law 31-225, opening up GovGuam’s annual health insurance solicitation to an exclusive and non-exclusive offers.

Ngirairikl has previously explained that in the years before the Legislature opened up health insurance procurement to non-exclusive offers, fewer companies were bidding on the contract, which led to higher costs on the employees and retirees.

News files state that SelectCare was the sole provider to submit bids on the annual contract in the early 2010s.

Each fiscal year, the contract is negotiated and the negotiating team presents the governor, with offers for an exclusive contract with one sole provider or a non-exclusive one.

Under the current administration, Lt. Gov. Ray Tenorio makes the selection between the non-exclusive and exclusive plan because Gov. Eddie Calvo, whose family owns SelectCare, recused himself from the selection process. For the past three fiscal years, the exclusive plan offered the government the most savings, yet Tenorio has continually chosen the non-exclusive plan.

According to memos the Government of Guam Health Insurance Negotiating Team has sent to Tenorio for fiscals 2014, 2015, 2016, and most recently, 2017, the most expensive health insurance contract – the non-exclusive plan – has been selected each year.

The negotiating team reported that the exclusive option for fiscal 2014 would have saved GovGuam about $18.7 million from its fiscal 2013 cost of $74.5 million. The non-exclusive plan proposed to reduce overall costs for the government by $1 million “assuming that each vendor successfully enrolls 1/3 of the population.”

The savings that could have been realized under executive plans in fiscal 2015 and fiscal 2016 would have been $6.25 million and $7.6 million respectively. NetCare Life Insurance offered the most beneficial plan in fiscal 2015 while TakeCare had the best offer for fiscal 2016.

According to the negotiating team’s memo for the current fiscal year, TakeCare was recommended as the best exclusive option and was estimated to save the government $20 million from the previous total health insurance cost of $93.1 million.

Pacific Daily News
Copyright © 2016 Guam Pacific Daily News. All Rights Reserved

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