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Office of Administration Announces Plan to Preserve Health Care Benefits for Current, Future Retired Commonwealth Employees
Date:9/28/2007

p>Facing similar cost pressures, many state and local governments, including other Pennsylvania governmental employers, are undertaking or have taken striking measures to reduce increasing costs. These measures include eliminating coverage, limiting coverage to several years, and/or requiring retiree premium sharing for the benefits. In Illinois, retirees with less than 20 years of service who are enrolled in the largest plan experienced increases in annual health insurance premiums from $72 to $120 between 2005 and 2007. Ohio recently created three tiers of retirement coverage effective 1/1/2007, phasing in increased retiree contributions over time. In West Virginia, retirees contribute approximately 30% of the cost of premiums.

The commonwealth has prudently and proactively managed the costs of the REHP program over the years by taking a number of administrative measures to contain increasing costs. Actions taken have included measures that leverage the REHP's purchasing power in the health care market to obtain competitive pricing, making periodic adjustments in the levels of coverage to offset rising costs, and contracting directly for specialty treatment and services such as mental health and durable medical equipment to ensure the best possible clinical management and pricing. To ensure that we can continue to provide a competitive and comprehensive program for our current and future retirees, we are announcing today several changes in the REHP program. Before describing these changes, it is important to understand the measures the commonwealth opted not to take. The commonwealth will not eliminate comprehensive medical or prescription coverage, nor will the commonwealth limit the time period that retiree coverage is available. The commonwealth will not impose premium sharing on annuitants who retired before July 1, 2005. While all options were considered, the commonwealth rejected these measures and opted instead for the most reasonable cost containment
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SOURCE Pennsylvania Office of Administration
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