Georgia lawmakers requested a study in February in the amended FY 2015 budget to examine “why [State Health Benefit Plan] SHBP’s costs are higher than other comparable government employee health plans.” The study, conducted by Aon Hewitt on behalf of the Georgia Department of Community Health, is out, and you can almost see the teachers nodding in agreement. It found that Georgia teachers and other state employees are paying 29% more for their health insurance than the average employee enrolled in comparable state plans – or 17% higher when adjusted for state cost levels, demographics, and number of dependents on each plan.
The study compares the SHBP to state health plans from Florida, Kentucky, Mississippi, South Carolina, Tennessee, and the separate Board of Regents plan. When looking at average overall plan costs per employee, including employer subsidies, the SHBP ranks 2nd most expensive, with costs 11% higher than the mean. Aon Hewitt finds three main drivers of this high relative cost versus other states: that healthcare is more expensive and utilized more often in Georgia, that SHBP recipients are older and more female, and that SHBP recipients have more dependents on their plan. Once these factors are controlled for, the study finds that Georgia’s total costs per employee are actually 1% lower than in comparable states.
The study can’t, however, control away the costs that teachers and other state employees directly bear – their payroll deductions for premiums and out-of-pocket costs. SHBP enrollees face the highest unadjusted employee cost of all the comparable plans studied: 29% higher than the mean. Even employees who fully participate in the plans “wellness incentives” and don’t use tobacco face higher unadjusted costs than the average participant in all other comparable plans: 23% higher than the average of all plans. When adjusted for the location, demographic, and dependent factors mentioned above, Georgia employees have the second highest employee cost of all comparable plans and end up paying 17% higher than the mean.
The report offers ten options to lower costs. Most focus on ways to reduce total plan costs, such as implementing telemedicine options, setting up on-site health clinics for teachers, or moving to narrower networks of doctors. However, some key in on the bigger problem for the SHBP: the employee share of costs. Since Georgia passes off more costs of SHBP to its employees than comparable states, one option offered is for the state to increase its employer contribution to better match its peers. With Georgia’s tax revenues up year-over-year, you can bet that teachers groups will be pushing hard for some of these new revenues to be put towards this option.