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Posted on: August 12, 2022

State Health Benefits Program Plan Design Committee Meets

Yesterday, the State Health Benefits Program (SHBP) Plan Design Committee met, and the members were given an Overview of the Rate Setting Environment by AON, a risk management firm assisting the SHBP. AON’s overview offered a number of reasons for the 21.6% projected 2023 premium increase, including utilization/COVID-19, inflation, and lack of anticipated program savings. Specific cost drivers for local government are: 

  • 8.1%: Actual 2021 claims experience was higher compared to expected 2021 claims.
    • While significant increases to member utilization in 2021 were anticipated because of COVID-19’s impact on 2020, actual utilization appears to be even higher, with utilization trends of 26.5% for Outpatient visits, 18.2% for Professional visits, 16.4% for Specialist visits, 17.0% for Emergency Room, and 38.0% for Urgent Care.
    • The 2022 rate setting analysis included estimated vendor reported savings in 2021 for Horizon’s Navigation Advocacy program as well as third-party vendor point solutions. Savings for these programs are now assumed to be in the underlying 2021 claims experience.
    • Actual 2021 prescription drug claims experience trend was 3.7%, lower than expected.
  • 3.5%: The 2022 rate setting analysis included an additional 3.0% medical claims savings in Plan Year 2022, as well as additional projected savings for the third-party vendor point solutions. The savings attributable to these programs have been mostly removed in the updated projections.
  • 7.6%: Annual medical and Rx trend projection assumptions have increased from the prior renewal analysis as a result of wide economic inflationary pressures on medical trends, expected increases in specialty drug trend costs and utilization, and an additional year of trend to 2023.
  • -1.5%: Impact of increases in projected rebates.
  • 0.5%: Impact of other changes including changes in plan migration assumptions, and changes in administrative fees.
  • 2.0%: Additional 2023 premium margin.

As of this writing, the SHBP has not rescheduled the Rate Renewal Meeting that was canceled on July 25.
 
In addition, at the request of several municipalities, we have prepared a sample resolution opposing the proposed increases to the State Health Benefits Program and calling for the SHBC membership to include representatives from both local and county governments.
 
We encourage you to review the presentation and reach out to the Governor’s office and your legislators to share your concerns about this large increase and its effects on municipal budgets.

Contact: Lori Buckelew, Deputy Executive Director & Director of Government Affairs, lbuckelew@njlm.org, 609-695-3481, x112.

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