GovGuam Owes More Than $10 Million For Retiree Health Insurance Payments

'Immmediate payment' required or insurance coverage will be in jeopardy

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, June 6, 2017) – The Department of Administration is more than $10 million behind on its share of health insurance payments for government of Guam retirees.

This marks the third consecutive year the government has fallen behind on payments for retiree benefits. Last year, the administration had a shortfall of $13.8 million. The Office of Public Accountability reported that, at the end of fiscal 2015, the government was short by $19.4 million for retirees’ health insurance.

The local government’s health care insurers NetCare, SelectCare and TakeCare are collectively owed $10.27 million in delinquent payments for three months’ worth of services to the retirees. According to the companies, the outstanding payment covers about six pay periods, from around March to May.

“We are seriously concerned with the lack of payment for the government of Guam’s contribution on the medical and dental premiums for the retirees and their dependents under the Retirement Fund,” TakeCare Health Plan Finance Administrator Alicia Iseke wrote to Administration Director Christine Baleto on May 29.

According to Iseke, the government owes TakeCare $565,804 from the end of February to mid-May. She added that. while TakeCare has continued to pay for the services, such as covering the cost of prescription drugs, GovGuam must make good on its debt “to avoid terminating the coverage of the retirees and dependents.”

“Because of the severe delinquency in the medical and dental premiums for the retirees and their dependents under the Retirement Fund, immediate payment of the unpaid Retirement Fund government-share premiums is required in order for the retirees and their dependents to continue with their medical and dental care,” Iseke wrote.

As of press time, Adelup had not responded to Pacific Daily News’ emailed questions

NetCare Plan Administrator Jerry Crisostomo said his company is owed about $706,000 for GovGuam’s retiree premiums. The administration, Crisostomo said, did remit about $92,000 Monday, but the government is still behind as its last payment was back in late February.

Crisostomo added that NetCare covers about 400 of GovGuam’s retirees.

The government’s largest insurance provider, SelectCare, is currently owed $9 million for seven pay periods, Plan Administrator Frank Campillo said.

“GovGuam has traditionally been somewhat delay in payments with most of their vendors in every category business category, but we have tried working with government to avoid the catastrophic impact of a cancelation,” Campillo said.

In addition to the late retiree payments, Cristomo said GovGuam also is three months and $120,000 behind on its share of foster children’s health insurance costs. NetCare, he said, insures 160 foster kids.

Crisostomo also said that NetCare is not considering canceling service, noting that the company actually anticipated the government would be behind on payments around this time, based on their experience last fiscal year.

“We ran in the same situation in FY 2016, so we expect them to be in the same boat,” Crisostomo said. He added that he expects the administration to seek a supplemental appropriation from the Legislature.

Despite the series of annual shortfalls, Crisostomo said NetCare still intends to compete for the government’s annual health insurance contract for fiscal 2018.

"We actually submitted, responded to the request for proposal,” Crisostomo said. “Although it’s concerning, we have every confidence the government of Guam will pay their compensation.”

Currently, Guam law gives the governor’s office the authority to choose between an exclusive plan with one insurance provider or a non-exclusive plan in which three companies are contracted to provide services, leaving the decision up to employees and retirees which company to enroll with.

For fiscal 2017, the negotiating team submitted an exclusive plan option with TakeCare that would’ve saved GovGuam an estimated $20 million from the $93 million it paid in fiscal 2016.

Lt. Gov. Ray Tenorio, who makes the decision for Adelup because Gov. Eddie Calvo’s family owns SelectCare, chose the non-exclusive option, with TakeCare, Calvo’s SelectCare and Moylan’s NetCare as providers.

“We want to provide our government of Guam employees and retirees with high quality service and not reduce ourselves to the cheapest price,” Tenorio stated in a previous press release. “The reality is you get what you pay for. And we should invest in quality healthcare for our people, from our active employees to those who have given this island decades of service.”

The health insurance question has been a contentious issue between the governor's office and Speaker Benjamin Cruz’s office since last year’s shortfall came to light. Cruz has said taxpayers could have saved more than $50 million if Adelup had opted for the exclusive contract since fiscal 2014.

Cruz introduced legislation that would have required the government’s health insurance negotiating team to submit only the most affordable health insurance option to the governor's office each fiscal year.

After lawmakers passed the measure in an 8-7 vote this past March, Gov. Eddie Calvo vetoed it, citing the desire to provide choice in health care insurers. An override would have required at least 10 votes.

Pacific Daily News
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