Employees are not receiving the expected level of management of their health insurance benefit.

Despite continuing attention to the plan, the core problems identified in this report have not been addressed.

Simply moving the plan will not address these core problems:  management resources and policy direction are also needed.

In the recent A&I survey, 90 percent of employees responding said health insurance is among the most important benefits provided by the state, and 85 percent ranked health insurance as one of the benefits needing improvement.  By participating in an employer-sponsored plan, employees are relying upon their employer to provide the expertise to design and manage a comprehensive and complex benefit.  However, we do not believe employees are receiving the expected level of management for this most important of all benefits.

For the past decade, and likely even longer, the state’s group health insurance plan has been a high-profile program.  The Legislature placed the plan with two different agencies before making it autonomous, and has changed its board composition several times.  In recent years, the Legislature has increased the plan’s funding twice and policy makers have discussed changing the board’s organizational status.  Despite this degree of attention, the core problems we identify in this report have not been addressed.

While we believe moving the plan into A&I to integrate it with broader compensation operations is necessary, simply moving it will not address these core problems.  Plan administration also needs to have the resources and policy direction to enable it to operate more strategically.  Strategic capacity will become more imperative as the state faces emerging workforce trends that will shape the type of benefits necessary to recruit and retain employees.

We conducted this evaluation at the same time another major effort is underway in the state’s benefit arena.  During the 2000 Session, the Legislature authorized the Compensation Commission to study the feasibility of implementing a total compensation package.  Along with two other recent evaluations focused on personnel issues (employee turnover and deferred compensation), this report provides policy makers with additional information to use in conjunction with the Compensation Commission’s work in deciding how best to meet the state’s total compensation goals.