Analysis of the SHBP mid-year rate renewal reports

Health Benefits Report 

Unlike last year, the mid-year rate renewal reports were presented to the State Health Benefits Commission in March (the 8th, to be exact). For reference, this report was withheld from the PDCs and the commissions until June last year, at which time it was too late to react or make any changes.

This analysis uses claims data through September 2022 to estimate rates for the coming year. While the report states that claims are down, the cost per claim is up. Once again, this is a failure of the plan administrator to control unit costs, as they are required to by contract.

The good news is that the trend seems to be slightly lower than originally anticipated by the state’s actuary. AON is still predicting that costs will increase by 6 percent for medical and 7.5 percent for prescription. This may not seem bad, but there is also a proposed 1 percent increase to adjust for healthy people leaving the plan and an additional 2 percent to rebuild the claims stabilization reserve fund. All this being said would suggest up to a 9 percent increase for 2024.

Cost drivers seem to be the utilization of expensive diabetes and anti-inflammation drugs, which are up remarkably. Also, as previously stated, the cost of services, or unit costs, continue to rise. This is intriguing when you realize that the Medicare index, from which the providers are generally paid, has not increased.

It is important to remember that last year, the mid-year rate renewal suggested an approximate 11 percent increase in 2023, but the final report issued in September called for a 24 percent medical increase.

While this is all being digested, the labor side was just notified again that super conciliation between the labor and management sides of the PDCs has once again been postponed due to the budget hearings in Trenton. This will further delay the initiatives put forth last year that we believe would rein in costs. We hold that this is still a supply-side issue that is exacerbated by the unwillingness to hold vendors and providers accountable.

We will continue to work with any part of the system that will listen and be reasonable, but the outlook as of this time does not seem very good.