How does the state employee health plan compare?

As lawmakers grapple with massive projected budget deficits and officials plan to lay off state workers, Connecticut leaders have called for employee unions to consider changes to their benefits package.

That’s drawn renewed focus on the state employees’ health plan, a package that requires workers to pay less for coverage and care than typical employer-sponsored insurance, according to national surveys. Legislative leaders from both parties have suggested, among other things, raising co-pays.

But union leaders say they’re not interested in givebacks after agreeing to concessions in 2009 and 2011, particularly since Gov. Dannel P. Malloy has said givebacks wouldn’t eliminate the need for layoffs. The current agreement covering health and pension benefits runs through 2022.

And union leaders say the idea of raising what employees pay for health care undermines the premise of the plan, which is designed to control costs by minimizing barriers that keep people from getting needed care or medication – helping to avoid preventable and costly medical problems.

Just what’s in the state employee health plan and how does it compare to other employer-sponsored coverage? Here’s a look.

The benefits

The state employee health plan includes relatively little in the way of out-of-pocket costs for members when they get care. Daniel E. Livingston, the chief negotiator of the State Employee Bargaining Agent Coalition, which represents the unions in bargaining for health and retirement benefits, said that’s intentional: Deductibles or co-pays can keep people from getting needed services – leading to worse health down the road – and put the biggest financial burden on those who are sickest, he said.

Many medical services are available to state employee health plan members with no out-of-pocket costs, including inpatient hospital care, outpatient surgery, preventive services, physical therapy and home health care.

The plan requires members to pay a $15 co-pay for visits to physician offices, walk-in centers, urgent care centers, outpatient mental health or substance abuse treatment, as well as for audiological screening and routine eye exams. There’s also a $35 co-pay for emergency room visits, which is waived if the patient is admitted to the hospital.

The plan also has a deductible – $350 for individuals or, for family plans, $350 per person, up to $1,400.  But it gets waived for people who participate in a wellness program – and 98 percent of eligible employees do, according to the state comptroller’s office. (The wellness program, created as part of the 2011 concession deal, requires people to get certain preventive care and, if they have one of five chronic conditions, participate in a disease education and counseling program.)

Those figures apply to care delivered by in-network providers.

“There’s a lot more cost-sharing in the average employer plan, but that’s generally true compared to government employee plans,” said Steve Wojcik, vice president of public policy at the National Business Group on Health.

How it compares

Connecticut’s state employee plan is relatively unusual in having both no cost-sharing for members who are hospitalized and, for nearly all members, no deductible. In a 2015 survey of 1,997 public and private employers, just 4 percent of workers with coverage at large firms had plans that didn’t include either a general deductible or cost-sharing for hospital visits, according to the Kaiser Family Foundation, which conducted the survey with the Health Research & Education Trust.

Most workers covered by plans in the survey – 81 percent – had a deductible. The size of those deductibles varied widely, but averaged $1,318 for individuals.

In Connecticut, 78 percent of private-sector employees had a deductible in 2013, averaging $1,598 for an individual, according to an analysis of federal data released last year by the Commonwealth Fund.

What do people typically pay for hospital admissions? Nearly two-thirds of workers with coverage in the Kaiser survey had plans that required them to pay co-insurance – a fixed percentage of the total cost – for hospital admissions; the average co-insurance was 19 percent of the cost of the admission (although most plans have caps on out-of-pocket spending that would limit costs in cases of very high bills). Another 14 percent had co-pays for hospital admissions, averaging $308.

As for office visits, the Connecticut state employee plan’s $15 co-pays were smaller than the average in the Kaiser survey – $24 for primary care visits and $37 for specialist visits.

Livingston, the Connecticut union negotiator, said the unions have tried to keep cost-sharing down by applying cost increases to premiums, which all plan members pay.

Prescription drugs

The prescription drug co-pays for state employees have drawn particular attention in discussions of givebacks.

The co-pays vary based on the type of drug and whether it treats a chronic or acute condition:

• Generic drugs: Members pay $5 for a 90-day supply of a maintenance drug or a 30-day supply of a drug to treat an acute condition.
• Preferred brand-name drugs: Members pay $10 for a 90-day supply of a maintenance drug or $20 for a 30-day supply of a non-maintenance drug.
• Non-preferred brand-name drugs: Members pay $25 for a 90-day supply of maintenance drugs, although that’s reduced to $10 if their doctor certifies that the specific drug is medically necessary. The copay for a 30-day supply of a drug to treat an acute condition is $35, unless a doctor certifies it’s medically necessary, in which case the copay drops to $20.

People who participate in the wellness program and have diabetes, asthma or chronic obstructive pulmonary disease, heart failure or heart disease, high cholesterol, or hypertension have reduced co-pays for medication related to those conditions. Supplies and medication for diabetes are free.

The Kaiser survey of public and private sector plans found higher average co-pays for workers in plans with at least three tiers of cost-sharing: $11 for tier-one drugs, $31 for second-tier drugs, $54 for third-tier and $93 for fourth-tier medications, which often include “lifestyle” drugs or costly biologics.

But allowing workers to get certain generic medications at no charge is becoming more common, according to a 2015 survey by the National Business Group on Health, which included 140 large employers that provided coverage to more than 10 million people. Twenty-four percent said they would require no co-pay for select generic medications in 2016, up from 18 percent in 2015.

Premiums: What people pay

State employees can choose from plans with monthly premiums that range from $44 to $82 for individual coverage. Another plan, which costs $195 per month, has been closed to new members for several years.

Monthly premiums for family coverage range from $161 to $328, although the plan that’s closed to new members has higher costs: $668.

Those who opt not to participate in the wellness program pay more: another $100 per month.

And all state employees now contribute 3 percent of their salaries to a fund that will go toward the cost of retirement health care coverage.

(While there are multiple plans, they each have the same benefit design, but differ in the networks of covered providers, coverage for out-of-network services and whether members need referrals to see certain providers.)

How it compares

In Connecticut, private-sector employees with single coverage paid an average of $109 per month toward their health insurance in 2014, the last year for which data is available, according to the federal Medical Expenditure Panel Survey. Those with family coverage paid an average of $336 per month.

Nationally, monthly premiums averaged $89 for individual coverage and $413 for family coverage in 2015, the Kaiser survey found.

Both measures found significant variation in premiums, indicating that the state employee premium costs were on the low side, but not complete outliers.

What’s a fair comparison?

In evaluating health plans, Livingston said the standard should be whether the plan uses the most effective and up-to-date thinking on how to save money while keeping people healthy.

“And if you look at it that way, the valid comparison between our plan and virtually [any] other plan is that we are head-and shoulders ahead of the typical plan,” he said.

The alternative, Livingston said, is to save the employer money by shifting more of the cost onto employees, to the point where the cost discourages them from seeking care. That can raise costs in the long run by leading people to forgo care when needed and get sicker. “It’s a failed model,” he said.

But while wellness programs are increasingly common among employers, cost-sharing remains a mainstay of many plans at levels higher than what Connecticut requires.

And while plans designed to improve workers’ access to certain types of health care services vary, they tend to have more directed designs than lowering cost-sharing overall, said Gary Claxton, director of the Health Care Marketplace Project and co-director of the Program for the Study of Health Reform and Private Insurance at the Kaiser Family Foundation.

For example, he said, they might lower cost-sharing for particular services deemed important for members, such as insulin for patients with diabetes or blood pressure medication for those who need it.

“Almost any cost-sharing discourages some people from getting services, that’s just true,” he said.

But Claxton added that many people believe cost-sharing makes people think about whether they need a certain service.

Similarly, Wojcik, from the National Business Group on Health, said many employers view some amount of cost sharing – at least for non-preventive services – as useful in helping to ensure that people are engaged in deciding what care to get, rather than just going because it doesn’t cost anything. But Wojcik said there are limits.

“As costs continue to rise and cost sharing grows, there is a concern that at some point, employees will forestall or put off needed care because of the cost-sharing,” he said, adding that the concern is particularly acute since wages have been stagnant.

Is there an optimal level that would cause people to think twice but not discourage needed care?

Claxton pointed out that those levels will depend on a person’s income, which varies among people in a given insurance plan.

“There isn’t anything out there that shows any right numbers,” he said.

How likely are givebacks?

Legislative leaders have called for benefit changes, while the Malloy administration has called on the unions to reopen the benefits contract that runs through 2022.

“I think the question of co-pays needs to be addressed. There should be some modest increases potentially in co-pays,” Senate President Pro Tem Martin M. Looney, D-New Haven, said last month. “Nothing that would be very punitive or excessive for people who have chronic conditions that they have to get drugs regularly for, but a modest increase in co-pays could save the state quite a bit of money without being extremely painful for the recipients.”

That followed a call by Republican leaders to increase co-pays and premiums as part of a series of concessions they said could avert the need for layoffs. Their proposal would not change how co-pays are handled for the five chronic conditions that qualify for lower costs in the wellness program.

But union leaders say they’re not interested in changes.

Livingston said the unions agreed in 2009 to raise premiums by $350 rather than raise co-pays. “And now someone says, ‘Well, your co-pays are too low,’” he said. “We traded for that.”

As for the suggestion that higher co-pays could help to avoid layoffs, Livingston said it’s an inaccurate premise.

“Nobody is saying, ‘Oh, if you pay a little more in your co-pays, there won’t be any layoffs,’” he said.

And Livingston reiterated the unions’ position that state employees shouldn’t be the ones asked to sacrifice. Instead, he suggested asking for more from the wealthy – a prospect that Malloy and legislators have indicated they’re not interested in pursuing this year.