Insurance Benefits
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These questions and answers are for general information purposes only. This information does not create an employment contract between the employee and the agency. This information does not create any contractual rights or entitlements. The agency reserves the right to revise the content of this information, in whole or in part. No promises or assurances, whether written or oral, which are contrary to or inconsistent with the terms of this paragraph create any contract of employment. This information does not constitute tax or legal advice.

General Questions

Q. Why are healthcare costs continuing to increase?

A. There are many reasons, ranging to increased use of prescription drugs, to greater demand for more expensive diagnostic tests, to sharp increases in the costs of hospital services. Taken together, these factors have contributed to an annual U.S. healthcare bill of $2.2 trillion, which consumes more than 16 percent of the entire American economy.

Q. Are the costs going to go down?

A. Not in the foreseeable future. The $2.2 trillion figure is expected to increase to $4.3 trillion within the next 10 years, which translates to an annual medical bill of $12,782 for every man, woman, and child in the nation.

Q. How have these increases affected premiums?

A. Significantly. Consumer out-of-pocket spending is expected to increase 5.3 percent per year through 2016, going from $850 in 2006 to about $1,400, according to the Centers for Medicare and Medicaid Services. The cost of health insurance is predicted to increase even faster – 6.4 percent annually.

Q. How is this affecting South Carolina?

A. We are not immune from the increases. Claims paid reached a record $1 billion in 2006, and per-subscriber claims were $5,216 – up from the 2000 figure of $3,500 and more than nine times higher than they were in 1980. And total claims paid in 2006 were more than 10 times higher than the total claims paid in 1983. Drug payments more than doubled between 2001 and 2006, to $322.4 million, while the average drug payment per insured life rose 82 percent.

Overall, the State Health Plan’s per-person expenditure has more than doubled since 1992, rising from $1,142 to $2,958 in 2006. Coverage that cost $200 in 1972 would cost $973.68 today – an increase of 386 percent.

Q. What is the State Health Plan’s record in managing insurance costs?

A. Despite the increases in heath care costs – and the corresponding increases in insurance premiums – the State Health Plan remains a great value. For example, since 1992 deductibles have actually decreased in real dollars. During the period from 1991-2000 – while the average expenditure per person increased 88 percent – premiums remained constant. And we continue to be less expensive – often significantly less expensive – than other regions, and the U.S.

Q. How do the State Health Plan’s premiums compare nationally?

A. Very well. In 2006, they were 17 percent lower than the Southern average; 21 percent lower than the Western average; 30 percent lower than the Midwestern average; and 29 percent lower than the Northeastern average. Nationally, they were 24 percent lower than the U.S. average.

Q. Can’t the State negotiate a better deal with Blue Cross/Blue Shield of South Carolina for coverage?

A. No, because Blue Cross/Blue Shield of South Carolina does not provide our insurance. It simply processes our medical claims. The State Health Plan is self-insured, meaning it does not pay premiums to an insurance company. All premiums are used to pay for your health insurance.

Q. Why not charge more for families who have more than one child?

A. Children are typically not as expensive to insure as adults. Only 30 percent of State Health Plan members have children on their insurance and the average number of insured children per family is 1.8. That means only a few people would have to pay more because they have larger families.

Q. If people use the emergency room or go to the doctor more, why not charge them more?

A. We do. State Health Plan subscribers pay a deductible each time they go to the emergency room or to the doctor. For more information on plan deductibles and copayments, see the Insurance Benefits Guide.

Q. Do legislators have the same insurance coverage?

A. Yes. State elected officials have the same health insurance coverage as other public employees and retirees and are subject to any premium increase or benefits changes approved by the South Carolina Budget and Control Board.

Q. Are private companies raising premiums for their employees?

A. Yes. Recent surveys show that employers are paying an average of $9,144 per employee for health insurance in 2008 up 6 percent from 2007. Employees cover $2,064 of that – an increase of 8 percent from last year. And within the past five years, employer health insurance costs have risen 40 percent, while employee health insurance costs are up 60 percent. What’s more, 40 percent of companies surveyed in a nationwide study said they plan to increase employees’ contributions for health benefits in 2008, and 36 percent say they will increase deductibles and copayments.

Q. What is the employees’ contribution to our insurance?

A. It depends on the plan and who is covered. In the Standard Plan, employees pay 25 percent of the cost for employee-only coverage; 24.3 percent for employee-child/children coverage; 30.6 percent for employee-spouse coverage; and 29.8 percent for full family coverage.

Under the Savings Plan, employees pay 3.2 percent of the total for employee-only coverage; 4.4 percent for employee-child/children coverage; 11.9 percent for employee-spouse coverage; and 13.5 percent for full family coverage.

Q. How are companies in the private sectors dealing with the rise in costs?

A. According to the Society for Human Resource Management, many employers are reducing or eliminating benefits, including HMO coverage, employer-funded health reimbursement accounts, well-baby programs, and prenatal programs.

Q. Is the State Health Plan our only option for insurance?

A. No. In addition to the State Health Plan, which includes the Standard Plan, the Savings Plan and the Medicare Supplemental Plan for retirees covered by Medicare, the state offers BlueChoice HealthPlan HMO. For further information, see your benefits administrator, refer to your Insurance Benefits Guide, or contact PEBA Insurance Benefits at 803-734-0678 (Greater Columbia area) or 888-260-9430 (toll-free outside the Columbia area).