State of Iowa sees health insurance savings using competitive bids

The state of Iowa is in line to save about $22.4 million in health insurance costs during 2013, thanks to a competitive bid process that dropped premium rates by 6.5 percent and resulted in a decline in the number of state employees covered by the various group plans, officials said Monday.

The Iowa Executive Council voted 4-0 Monday to approve health, dental, life and long-term disability rates for the calendar year that begins next January. A consultant recommended the state again contract with Wellmark Blue Cross/Blue Shield of Iowa after reviewing bids submitted by Wellmark and UnitedHealthCare of Iowa.

Ed Holland of the state Department of Administrative Services said the state's contribution for health insurance coverage next year is estimated to be more than $307.36 million, compared to nearly $329.77 million in 2012. The contribution by state employees who pay nothing for single coverage but a portion of the family plans also was projected to decline from $10.89 million this year to $10.36 million in 2013.

Overall, the state cost for all insurance coverage was slated to drop from $345.6 million in 2012 to $323.8 million next year when higher dental and basic term life insurance rates were figured in.

“That's real money,” said Gov. Terry Branstad, chairman of the council that includes the state secretaries of state and agriculture, the state treasurer and state auditor. “That's good news, any time you can save $22 million.”

Holland said his department was “pretty pleased” with the outcome of the competitive bid process.

Branstad said he believed the lower health insurance costs underscored the emphasis his administration has placed on making Iowa the healthiest state in the nation and the reduction in the number of state employees by 718 since he took office in January 2011. The governor said the state could save another $100 million if all state employees agreed to pay 20 percent of their health insurance premium costs.

Last summer, Branstad signed an executive order establishing a health insurance option that allowed state employees, department leaders and elected officials to voluntarily pay 20 percent of their premium costs beginning Aug. 1 and running through the rest of this year. A total of 95 state officials and employees – including Branstad and Lt. Gov. Kim Reynolds -- signed up for the voluntary option, which will be incorporated on a voluntary basis into some of the insurance plans that will be offered during the upcoming fall enrollment period.

When Branstad signed the executive order on July 2, DAS officials estimated that 88 percent of state workers did not contribute anything toward their health insurance premiums and, in total, Iowa taxpayers were funding 97 cents of every one dollar spent on health-care premiums. The GOP governor has indicated he plans to ask unionized state employees to pay 20 percent of their health-care costs when negotiations begin in November for a new two-year collective bargaining agreement that would take effect July 1, 2013.

Opponents of last summer's voluntary option called it a “political stunt” and a public effort to bully state workers into taking a cut in compensation that violated Iowa's collective bargaining law. Danny Homan, president of American Federation of State, County and Municipal Employees (AFSCME) Council 61 -- the state's largest public employees union – later filed a prohibited practice complaint with the Iowa Public Employment Relations Board, which oversees the state's collective bargaining process. It asked the board to find that health insurance premiums are a mandatory subject of collective bargaining and cannot be changed outside the bargaining process.