Delaware’s Group Health Insurance Plan (GHIP) has managed to stave off its anticipated cash deficit for now, with projections suggesting the shortfall may hit as early as June, according to statements made at the recent meeting of the State Employee Benefits Committee (SEBC).
Initially projected to face a shortfall as early as January of this year, GHIP’s financial outlook now indicates a likely deficit of $8 million by the end of the fiscal year. This figure marks a stark contrast to the anticipated surplus of $2.4 million projected for Fiscal Year 2024.
Secretary Claire DeMatteis of the Delaware Department of Human Resources shared these updates during the SEBC meeting held on Tuesday, underscoring the significance of the evolving financial landscape for state employee health insurance.
While the looming deficit poses challenges, there are indications that future premium hikes may be less severe than initially feared. The SEBC had previously endorsed a 27% increase in health insurance premiums for state employees, effective July 1, 2024, but consultant Brian Stitzel of Willis Towers Watson is now suggesting a different trajectory.
Stitzel’s revised recommendations propose no premium increase for Fiscal Year 2026, with modest hikes of 5% projected for both Fiscal Years 2027 and 2028. These adjustments represent a slight departure from earlier forecasts, which had hinted at higher premium hikes for those fiscal years.
During the meeting, Stitzel also shed light on the evolving landscape of healthcare trends and costs. Prescription drug expenses, in particular, are expected to escalate, driven by rising medication costs and increased usage, especially for weight loss medications like Ozempic.
Moreover, Stitzel highlighted the significant expenditures associated with bariatric surgeries, joint replacements, and orthopedic procedures under the state’s SurgeryPlus program, underscoring the need for prudent management of healthcare expenses.
In light of these trends, Stitzel recommended adjustments to the projected healthcare cost trends, suggesting increases from 9% to 10% for pharmacy populations and employer group waiver plan (EGWP) retirees. These adjustments, if implemented, are estimated to incur additional costs of approximately $6 million for Fiscal Year 2025, escalating to $30 million by Fiscal Year 2028.
As Delaware’s state employee health insurance fund navigates these financial challenges, stakeholders remain vigilant, balancing the imperative of fiscal prudence with the need to provide comprehensive healthcare coverage for state employees and retirees alike.
