The overall medical insurance premium increase will be 11.8% for the state program and 15.1% for the local program. The actual rate increases for members may differ due to health plan choice and/or employer premium contributions.

Local employers establish the premium contribution for their employees. The Department of Administration’s Division of Personnel Management determines both the state employee share of the premium and the employer contribution to the Health Savings Account.

Causes of Premium Increases

Both the state and local programs that make up the Group Health Insurance Program must collect enough in premiums from employers and employees to cover the expected costs of any plan year.

Increasing Health Care and Pharmacy Costs

Costs for health care have increased across the insurance industry and are projected to continue to increase along with inflation. This is in part due to higher utilization following the COVID pandemic when many people postponed care.

There is also the increasing cost of specialty drugs; even though few members take them, their prices drive an outsized part of the increases. For example: In 2022, specialty drugs represented 2.25% of all prescriptions filled and 62.8% for non-Medicare and 57.2% for Medicare total drug spending.

Stabilizing the Reserve Fund

The Group Insurance Board has a reserve fund for excess moneys from Group Health Insurance Program operations and investment returns. The reserve fund is used to pay prescription and Uniform Dental claims and offset future state and local premium and program costs.

In 2022, the Board used funds to offset 2023 premium costs. However, due to lower market returns, the fund dropped to the point where it could not be used for this purpose for 2024. Following its target reserve balance policy, the Board took action to increase reserves to mitigate the need for large rate increases in the future. For more information about the reserve fund, see pages 2-4 of the 2024 Health Plan Rates and Qualifications (August 11, 2023) memo presented by ETF to the Board.