40 pct. premium hike could mean $1.2M in added cost

A week after canceling a request for proposals for a government health insurance program, Gov. Eloy S. Inos said that extending the contract with current provider Aetna International by up to 60 days could mean some $1.2 million in added cost to the government due to the 40-percent premium increase.

He said the government will issue a new RFP, depending on the work of a committee comprised of personnel from the Office of the Attorney General, NMI Retirement Fund, Department of Finance, and the office of the Insurance Commissioner/Department of Commerce.

“This last RFP gave us a lot of insights just because of the premium costs—it’s skyrocketing. With limited providers, limited services, higher deductibles and higher co-pays, we have to come up with a proper mix to make sure it’s affordable to the members. As you know, the government is picking up about 50 percent of the premium. So it’s going to be a drain on the general fund as well,” he said in an interview at the signing of a proclamation declaring January 2014 Cervical Cancer Awareness Month on Friday.

The governor said the 40-percent premium increase could be manageable if the total cost is managed correctly.

“For example, you eliminate some of the services to be covered, then the impact of the 40 percent won’t be as great but if we maintain the same level of service then… Right now it’s costing the whole program, about $19 million/$18 million a year—half of that is shouldered by the government. You do the math, 40 percent increase, you can see how much that’s going to cost in annual additional premium,” Inos added.

In the new RFP, the government would want the “widest coverage” available in the United States, for example.

“We ask them to give us options and so forth. We need to give them ideas to the membership, which one comprised retirees and active, given that retirees cost more to insure,” he added.

The additional cost to the government as a result of the health insurance premium hike, along with the $5 million that the government has to come up with to add to the $20 million it already budgeted for in fiscal year 2014 to remit to the Retirement Settlement Fund, means more revenue-generating measures and cost-cutting for the government.

But Inos said work hour cuts “will always be the last resort” as far as additional cost-cutting measures are concerned.

The governor said once the video lottery and electronic gaming projects are rolled out, then the government could expect new revenues that would help cover the budget shortfall for both the Retirement Settlement Fund and health insurance costs.

“The only thing right now that we need funded is the $5 million increase in required amount to make the minimum guaranteed payment for the Retirement and $7 million, now probably $9 million, in additional health insurance premium,” Inos added.

Besides the video lottery and electronic gaming bills that are now laws, there are still pending revenue-generating bills that could help the CNMI, including amendments to the Sales Receipts Act.