Private sector process prolonged by officials
Faculty and staff may be forced to wait until 2015 for relief from high health costs after state officials decided to prolong a possible private sector partnership.
Nevada’s Public Employees’ Benefits Program board decided July 11 to hold focus group sessions for the next few months, which means lower health costs by next year is improbable.
“It’s likely that … nothing gets done [until] the next biennium which means July 2015,” said Christopher Cochran, the Nevada System of Higher Education representative on the PEBP board.
Since January, PEBP has been deciding whether providing health care through a private health insurance company would cost less for its participants. In March, PEBP was leaning towards asking private insurance companies for price quotes. However, in May PEBP decided to inquire what kind of plans companies can offer first, excluding any pricing information.
Some members on the PEBP board feel it best to ask for price quotes immediately because the agency would know if prices are cheaper in the market within months. But others on the board, believe a slower, more thorough process is better.
At its July 11 board meeting PEBP decided to conduct focus group sessions with a price tag of up to $10,000 in order to evaluate what kind of health plans PEBP participants want and how much they would be willing to pay.
“I think what focus groups can do … is probably give us a better picture of what [participants] are looking for [in a health plan],” Cochran said.
Eleven focus group sessions with 12 participants each will be held in both northern and southern Nevada. PEBP has yet to identify an organization that will conduct the sessions.
While the focus groups may come as welcome news for board members who want to move cautiously, it will take time to implement the study and evaluate the results. PEBP only has until January to decide if a move to the private sector is feasible by July 2014.
Health benefits are a time sensitive issue for many state employees, primarily faculty and staff, who have been calling for a change since prices soared in July 2011.
Because PEBP is a state agency, it was affected by Nevada’s economic downturn that began in 2007. Faced with a mandatory $111-million budget cut, PEBP raised premiums and deductibles by more than double in 2011. The price hike left many state employees outraged, some of whom could no longer afford their prescription medication.
A PEBP Insurance Benefits Satisfaction Survey conducted between April and May reveals 67.4 percent of PEBP’s PPO beneficiaries are dissatisfied with their plan, while 49 percent of HMO participants are unhappy with their plan. About 3,400 state employees participated in the survey, 62 percent of whom are NSHE employees.
“People are not happy, so I think that requires somebody to do something different,” said Gerry Bomotti, UNLV’s senior vice president for finance and business and middle man between NSHE and PEBP.
Mandatory furlough days, salary cuts and costly health benefits resulted in over 100 UNLV faculty and staff members seeking employment out of Nevada between 2010 and 2011. Two years later, salary cuts have been eliminated, but furlough days and overwhelming health costs still remain.
It’s a situation Cochran says must be solved so Nevada’s higher education system can be competitive.
“If we’re going to recruit good people to Nevada we have to make sure we can offer competitive salaries and benefits, and I’m not sure we can do that right now,” Cochran said.
“We are competing with universities all over the country,” he added. “We lost a lot of positions when the economy tanked.”
But while PEBP and NSHE members agree that health costs must go down, about seven months of discussion to see what the private market can offer has yielded almost no results.
Some PEBP members argue that the private market survives based on competition and profiteering, which would only lead to even higher health costs.
But Bomotti says the only way of knowing if prices are cheaper in the private sector is to ask.
“If you have a better deal, you can move in that direction,” he said. “If not, you can show all the participants that [they] have a good deal.”
PEBP has requested that companies interested in providing health insurance to its participants to identify health plans they could offer. But the agency thought having focus groups was the best way to mitigate concerns.
“They’re taking their time because they don’t want to overstep the situation,” Cochran said. “There are some members on the board who think that turning to the private market is a mistake.”
Bomotti, who hopes a solution will be in place by next July, views the focus groups as a positive step forward.
“It’s a lot better than PEBP voting not to pursue any steps toward [a move to the private market],” he said. “The method they decided to go forward with was getting feedback.”
But Cochran, an advocate for seeking price quotes from private companies as soon as possible, said that PEBP must take action soon to lower health costs.
“I just don’t want studying things to death and still trying to decide what to do,” he said. “At some point, it’s up to the board to make a decision in what direction we go.”