Gov. John deJongh Jr. submitted a final fiscal year 2012 government insurance plan to the Legislature this week, proposing a CIGNA health insurance plan that cuts the territory’s premiums by more than $600,000 versus last year, according to Government House.
The group insurance agreements, recommended to the governor by the Health Insurance Board of Trustees, are designed to cut costs and counter a dramatic escalation in premiums incurred by the territory over the past few years, according to Government House.
DeJongh presented the final proposals for health, life, vision and dental insurance in a letter sent Sept. 6 to Senate President Ronald Russell. In the letter, the governor made a case for reducing some health benefits for the territory’s public workforce.
Over the past four years, from 2007 to 2011, the V.I. government’s insurance costs have gone from $82.5 million to $122.7 million, deJongh said. During the same period, the territory has experienced a dramatic decline in revenue. “We simply cannot sustain these increases indefinitely,” deJongh said in his letter to Russell.
“I believe that the time has come for us to consider making serious changes to our future insurance benefits package,” the governor said.
The V.I. government currently offers a far more generous plan than most other local governments and municipalities throughout the United States, he said. The territory has one of the few plans that cover retirees, rather than allowing Medicare to become their primary insurer. Those costs in the past had been financially sustainable, but the active employee base that subsidizes retiree benefits is now being overwhelmed by the growth in the number of retirees, deJongh said.
“Accordingly, we must begin the dialogue now to consider the very difficult decisions we must address about the growing costs of our health insurance plan.” deJongh said in his letter.
Group medical and prescription drug benefits account for the largest expenditure in the benefits program. Without any change in plans, based on claims submitted over the past year, the Board projected a 12.8 percent increase in premiums—roughly $15.8 million— in FY 2012. The proposal on the table would instead put in place a small decrease, saving the territory $16.3 million, as compared to earlier projections given by the V.I. Health Insurance Board of Trustees’ consultant, according to Government House.
DeJongh stipulated any agreement finalized with CIGNA for health insurance must include a wellness proposal, according to Government House. CIGNA will pay $200,000 annually and help develop a partnership with the territory to develop and implement practical initiatives focused on improving health status and awareness for beneficiaries. CIGNA must also agree to create Health Improvement Centers to address wellness issues for government employees and retirees; and endow two four-year nursing scholarships of $6,250 per year to the University of the Virgin Islands.
The Health Insurance Board is also recommending a deal with AETNA for life insurance. That agreement will not present any changes from the current life insurance benefits received by government employees.
AETNA also offered the most attractive proposal for vision coverage—a plan that will reduce costs by 12 percent from the current agreement.
Finally, the Board recommended a deal with CIGNA for dental insurance, which presents a slight decrease in premiums by employing the Premium Stabilization Reserve. CIGNA also offers a more extensive local network of dentists than Delta Dental, the current carrier.
The V.I. Legislature must now examine and approve or disapprove the proposal recommended by the Insurance Board and Government House.
