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Back Local News Exclusive health insurance for GovGuam is cheaper

Exclusive health insurance for GovGuam is cheaper

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THE non-exclusive health insurance option negotiated by the government of Guam’s health insurance negotiating team, and selected by Gov. Eddie Calvo, for government of Guam employees and retirees will likely cost $17 million more in premiums than the exclusive option the team negotiated, according to a letter sent by the team to the Guam Legislature. The non-exclusive option was estimated by the team to be $1 million less expensive than the cost of the current plan.

Companies wishing to provide the government’s health insurance plan were to submit two offers. The first was to be based on the assumption that there would be one insurer selected – the exclusive option. The other was to be based on the assumption that up to three contracts would be negotiated for the group health insurance and members would be free to choose their plan from the three – the non-exclusive option.

According to the team’s letter, four companies originally submitted offers, but one company withdrew its offer before negotiations began. None of the companies involved in the process was named in any letter or by officials. The government’s current health insurance plan is provided by Calvo’s SelectCare – a company owned by the governor’s family.

The team did not make a recommendation. Lt. Gov. Ray Tenorio recommended the non-exclusive option “based upon the options” presented by the team.

Opportunity

In recommending the non-exclusive option, Tenorio wrote on Wednesday, “We have the opportunity to respond to the call to give employees and retirees choice in insurance companies.” The governor concurred with the recommendation and his chief legal counsel advised the Department of Administration that he had opted for the non-exclusive option.

According to the team’s letter, the cost of medical, drug and dental premiums for fiscal 2013 totaled $74.45 million. The team noted that the figure is not final due to a “participating contract agreement” by which the final amount of premiums that should have been paid during fiscal 2012 and 2013 will be determined and payment reconciled at the end of April 2014.

The team estimated that under the exclusive option negotiated for fiscal 2014, the total premiums for medical, drug and dental coverage will be $55.7 million, or $18.7 million less than the current premiums.

In estimating the cost of the non-exclusive option, the team assessed the cost of four scenarios – one in which each of the participating companies covered one-third of the eligible plan members and three in which a different company in each covered 100 percent of the consumers. Under the first scenario, the total premiums paid to all of the companies were estimated at $73.39 million or $1.06 million less than the premiums paid for fiscal 2013.

If any company were to get all of the business – despite the availability of the other plans – the total premiums would be $68.56 million, $70.65 million or $80.95 million respectively.

True cost

“The true cost of the (health insurance) plan won’t be known until every customer makes their choice,” said Troy Torres, spokesman for Calvo. He said that under various scenarios, depending on plan deductibles and other variables, the costs of any of the plans could be more or less than the team’s figures. “Those are only estimates. ... The governor went with giving the employees and retirees a choice of health insurance plans.”

Sen. Ben Pangelinan questioned the apparent additional cost of the option chosen by Calvo. “Who was the company that was accepted by the negotiating committee to be the exclusive carrier that would have saved the program $18 million?” he said. “And why did the governor go with the non-exclusive option that will cost the program $17 million more than that non-exclusive contract?”

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