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Retirees Meet with Insurance Board to Discuss Premiums Increase

About 150 passionate retirees and active employees met in the teleconference rooms on the St. Croix and St. Thomas campuses of the University of the Virgin Islands to hear John Abramson, Chairman of the Board of Trustees for the Government Employees Service Commission (GESC), discuss the reasons for the increase in health insurance premiums.

Abramson opened the presentation by saying that for years, the health insurance plan has been improperly funded causing active employees to subsidize the benefits received by retirees. Although the Board attempted to address the situation during previous negotiation periods, no changes occurred.

In 2012, the Board re-approached the issue and this time it was decided that active employees should no longer subsidize retirees who were utilizing benefits, as represented by the $36,136,602 claims submitted in 2011, versus the $29,203,090 they paid in premiums. The difference of $6,933,522 is what active employees were subsidizing for retirees.

While the increase in cost presented huge challenges for retirees living on fixed incomes, the short notice of the change made the challenge even more severe. For most retirees, this meant that learning what their options were and being able to make an informed decision had to be done in “crisis mode,” something that made retirees feel was caused by some type of hidden agenda.

However, in reality the late notice was based on the timing of the Governor’s signature on the contract renewal which had to be in place by October 1, 2012. A press release dated September 27th, one week before the end of the Government’s Open Enrollment period, was the first notification to active employees and retirees who had not picked up the information from the Department of Personnel’s website.

“Why was the increase so high instead of an incremental 10 or 15 percent more,” was a question that many retirees asked. The reason, according to Abramson, is that each year there is an ongoing, regular increased cost in the health industry. Research and development, new procedures, new equipment, new treatments, new drugs all cost money to develop and bring to patients. These improvements are known as “medical trends” whose costs usually amount to 10-15 percent more in insurance costs just to remain current. Not having increased retiree premiums over the last several periods, the VI government health insurance costs were already behind. That is why the increase at this point needed to be so high to incorporate the missing increases in medical trends and to accommodate the costs of retirees’ actual usage rates as demonstrated by their claims.

When asked why the Board didn’t come to retirees when determining what steps to take to resolve the insurance dilemma, Abramson indicated: the Board reviewed five bids from other companies, and all were higher than the CIGNA plan. Our options were to change the plan, reduce benefits and keep the plan costs the same, OR to raise premiums and keep the plan benefits intact. The Board chose not to reduce benefits and to instead increase costs. To address the retirees’ concerns, Abramson pondered whether, ‘Next time we (the Board) may come to retirees, present the options and ask you directly whether you want to pay more money or receive less services.’

“I am a consumer just like everyone else,” stated Abramson, “I feel the hurt of the 8 percent cut and WAPA’s increases. We (the GESC Board) have not given any consideration to eliminating retirees from our plan. We are doing everything humanly possible to keep you (retirees attending the forum) on the plan. This is the richest, best possible insurance plan. We have worked diligently to keep the plan solvent.”

“But as the Board Chairman I have the judiciary responsibility to make sure that everyone in the plan has insurance coverage. We knew we had issues with the Government plan which would eventually cause problems, and we felt that just because it went unfixed for years doesn’t mean that it didn’t need to get fixed. The Board felt that we couldn’t prolong this process any longer, and that we all needed to do what was required so that we would ALL have insurance coverage in the future.