| March 19, 2012

State employee health-insurance reform would save millions

Oklahoma policymakers should implement the reforms of SB 2052, which was passed by the legislature in 2010 but vetoed by former Gov. Brad Henry. The reforms include consolidation of duplicative administrative functions of the state Employee Benefits Council (EBC) and the Oklahoma State and Education Employees Group Insurance Board (OSEEGIB), which is estimated to result in an administrative savings of $2 million to $3 million annually.

Non-appropriated revenue of OSEEGIB and EBC is derived from state appropriations for health-benefit payments for employees, so any spending reductions at EBC and OSEEGIB equals savings for state-appropriated agencies. Other features of the reform include implementation of a “winner-take-all” competitive bidding process for HMO benefits that are offered by the state to employees, which is how most private-sector firms choose health insurance products. This reform, coupled with the stabilization of the benefit allowance for state employees, would result in savings of more than $70 million annually.

In addition, the state should reform the OSEEGIB HealthChoice plan so that the insurance offering for state employees is a Health Savings Account (HSA) plan. With the current generous benefit allowance – which pays significantly more than the costs of health benefits, allowing many state employees to pocket the difference – and implementation of health insurance incentive reforms, all state employees can be converted to Health Savings Accounts without a reduction in the quality of health benefits available to state employees. As a final part of this reform, the state needs to evaluate the cost of continuing to operate its own self-insured plan (HealthChoice), compared to available private health insurance options. If significant long-term savings can be achieved without impacting core healthcare options for employees, the state should consider ending this option.

These reforms are not only good policy, they’re good politics. A recent Sooner Poll survey reveals that 69 percent of likely voters support such reforms.

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