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September 17, 2003
Room H-10
State Capitol
Cheyenne, Wyoming
Senator Cale Case, Chairman;
Senator Irene Devin and Mike Massie;
Representatives Larry Meuli and Phil Nicholas.
John Rivera, Senior Staff Attorney, and Bill Mai, Senior Legislative Analyst.
Please refer to Appendix 1 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.
Senator John Schiffer;
Representative Elaine Harvey
All meeting materials and handouts provided to the Subcommittee by the Legislative Service Office (LSO), public officials, lobbyists, and the public are referenced in the Meeting Materials Index, attached to the minutes. These materials are on file at the LSO and are part of the official record of the meeting.
Chairman Case called the meeting to order at 8:30 a.m.. The following sections summarize the Subcommittee proceedings by topic.
Chairman Case explained the purpose of the meeting was to receive the preliminary draft report from Buck Consultants, Inc., and to make recommendations for the final report.
Mr. Christopher Hulla and Ms. Lisa Ramirez, Buck Consultants, Inc. (Buck), distributed Appendix 2, copies of the draft report and explained the additional sheet being distributed was a replacement for a page in the report sent to Subcommittee members that didn't properly print the bottom of the page.
Mr. Hulla explained that the state employees' health insurance plan is being managed by Great West Insurance to implement cutting edge concepts in health care management. The state could possibly create incentives for Great West, as plan administrator, to make more aggressive efforts to save costs to the program. Such incentives will be proposed in more detail in the final report. Based on recent case studies, consumer-driven health care efforts aren't achieving all the cost-savings expected, in part because the plans are used primarily by participants who are higher utilizers of health care services. Ms. Ramirez added Wyoming has done a lot with respect to consumer-driven health care, but is limited by a lack of competition in the state.
On the other hand, Mr. Hulla advised health reimbursement accounts that can be rolled over to the extent not used in a calendar year may provide a mechanism for a more thoughtful use of health insurance by state employees if properly structured, including possibly increasing deductibles. Such accounts have to be under the control of the employer and used only for health care expenses, or the funds will not be allowed to roll-over and may be lost to the employee upon separation from service.
Mr. Tom Mann, Director, Wyoming Retirement System, advised he is looking at similar options for use of accumulated sick leave.
Mr. Hulla stated, under the current state policy, accumulated sick leave is looked upon by many as a deferred compensation plan that provides little catastrophic help to short-term employees. Private employers use a "casual leave" concept along with short- and long-term disability plans, which puts the insurance company on the hook to get the sick or injured employee back to work as quickly as possible. Some employers combine annual and sick leave into a personal time off plan to be used at the employee's discretion. Nevertheless, sick leave is the area where the greatest savings can be achieved.
Chairman Case asked Buck to document its assertions, for example, if companies are achieving savings, Buck should describe who they are and how much was saved under the plans.
Mr. Hulla stated data has at times been difficult to obtain because of privacy restrictions of the federal Health Insurance Portability and Accountability Act (HIPAA). Great West, as a third party administrator, could hire an independent third party to contact patients for a case management study without violating HIPAA as long as the employer is left out of the process. Absenteeism data can be shared to provide meaningful data for case management.
Senator Devin suggested that advance notice of leave can result in significant cost-savings, based on data she reviewed as a member of the Ivinson Memorial Hospital Board of Trustees.
Chairman Case requested a brief discussion of how Wyoming state employees compare with other states' employees and private sector employees. Mr. Hulla stated Wyoming's benefit package is fairly average, except in the area of retirement plans where Wyoming is somewhat liberal when compared with surrounding states' public employees. Compared to private sector employees in Wyoming, state employees have better benefits because most private employers in the state are relatively small and can't afford an extensive benefit package.
Chairman Case stated the Legislature often struggles with the issue of bringing other public groups into the state employees' group insurance program. Senator Devin added that school districts have higher utilization rates, so it may not be advantageous to bring them into the state plan.
In response to a question from Senator Devin, Mr. Hulla replied that there is no scientific data setting a number beyond which there is no advantage to increase the size of a group for purposes of spreading the risk and lowering group insurance rates. He has seen that after approximately 10,000 participants in a plan there is no appreciable spread of risk to lower premiums. In some groups, that number could be even lower.
Senator Devin also asked if the report will include an analysis of the ratio of pay to benefits. She is concerned that it is difficult to attract younger employees because of benefits paid to older employees and retirees. Mr. Hulla responded that Buck does not have all the data necessary to study the pay to benefit ratios, but Buck could compare average salaries among selected states' employees. Specifically, Buck does not have data on benefits as a percentage of pay, but may be able to extrapolate from the available data.
Mr. Mann said he can work with Buck and the Department of Employment Research and Planning Division to see if they can get data to do a more meaningful study of pay to benefit ratios.
Chairman Case stated the study should specify that University of Wyoming and community college employees are not covered in the study and that there are possible differences in insurance and retirement benefits in those programs
Wyoming Retirement System
The Subcommittee discussed an issue related to retirees and the cost of insurance premiums. Mr. Mann explained that some early retirees believed they would be able to buy health insurance at the same rate as state employees, but instead were required to pay for premiums at the rate for most full retirees, while others, depending on when they participated in early retirement, were able to get the insurance at the lower premium.
Mr. Hulla stated the data on that issue can be found in an appendix to the draft report. Chairman Case was concerned the reader of the report may be unable to understand the structure of the group or the coverage provided based on the raw data in the appendices. Buck will provide a narrative to explain the data, but, without knowing what the benefits can buy, it is not possible to compare apples to apples.
Mr. Brian Foster, Administrator, Department of Administration and Information, Human Resources Division, advised that at-will contract employees can get benefits, subject to the policy of the agency for which the employees works under contract. There are currently 609 contract employees. If they are allowed to and do participate in the benefits package available to state employees such benefits are included in the Buck study, but their salaries are not included.
Chairman Case then reviewed Section 328 of the budget bill that authorized the current study to ensure that all issues were being considered. The draft report has come a long way toward meeting the requirements of the enabling legislation and he thanked everyone for their efforts in the endeavor. He advised that Representative Meuli has recently been appointed chairman of the retirement system subcommittee, but after discussion it was agreed that subcommittee could be dispensed with since Buck has done much of the work it was anticipated the retirement system subcommittee would have to do.
The Subcommittee was advised that Dr. Harold Gardner's study for the executive branch was to be presented the first week of October, after this Subcommittee receives the final report from Buck, but no date has been set for Dr. Gardner's final report. Chairman Case advised he would contact Julie Sapp in the Governor's Office to see if he can get more details about their meeting.
After discussion, Chairman Case set a meeting date of the afternoon of September 29, 2003, to receive an updated report from Buck.
There being no further business, Chairman Case adjourned the meeting at 12:30 p.m.
Respectfully submitted,
Senator Cale Case, Chairman