We identified several reasons why EGI participants pay more for health insurance, including a lower employer contribution, an older pool, and inherent limitations in the plan s ability to manage costs. Since plan costs are comparatively high, employees may be able to obtain dependent health insurance at lower cost on the private market or, if they are married, through a spouse s plan. We believe this is the primary reason the EGI pool is older and has fewer dependents than our comparator plans. When they leave the plan, the pool becomes less healthy, claims costs increase, and the cycle continues. However, the EGI administrative structure is not positioned to address plan design issues and is unable to strategically manage the plan, as would be necessary to address the complex problems summarized above.
Statute assigns the board transactional duties, designed to keep the health plan solvent.
The EGI board performs these duties, but lacks the staff and information resources, policy direction, and expertise to identify and implement long-range strategies to improve employee benefits at stable costs. Further, the plan s organizational autonomy impedes the state s ability to enact total compensation planning, which the Legislature identified as a goal in the 2000 legislative session. We recommend the Legislature establish a strategic framework to administer group insurance. The problems identified in our evaluation require a proactive solution, but limited policy direction, isolation, and insufficient resources and expertise diminish management s capacity to address these issues. To most efficiently address these structural weaknesses, we suggest disbanding the current autonomous policymaking board and creating a professional plan function within the Department of Administration and Information to manage the plan.