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The Honolulu Advertiser
Posted on: Thursday, May 20, 2010

EUTF rate hike action delayed

BY Greg Wiles
Advertiser Staff Writer

After sometimes heated disagreements, trustees of the Hawai'i Employer-Union Health Benefits Trust Fund yesterday agreed to a temporary extension of rates paid by members of its preferred provider plan.

The board voted to extend the rates for three months, ending a stalemate over what the financially strapped program should do about certain health plans at the start of the fiscal year on July 1.

The trustees five from state and county employers and five from unions representing the government employees have been trying to find common ground on a rate increase for the past several months, given worries that the self-funded plan will run out of cash.

But the trustees have been reluctant to pass on a 22.1-plus percent increase starting July 1, as recommended by the fund's consultants. The rate hike would come atop premium increases of 23 percent to 24 percent last year.

"We're going to price our own employees out of the fund," said Randy Perreira, head of the Hawaii Government Employees Association and an EUTF trustee.

Yesterday, the trust's adviser, Aon Consulting, told trustees that without an increase, the risk of the fund being unable to pay claims and becoming insolvent rise greatly. In recent weeks, Aon reviewed data that it concluded show that a previously proposed 26.2 percent hike is no longer needed, but that a big increase is still justified if the trust wants to get out of a financial hole.

The rate hikes apply to people under the EUTF's so-called self-funded plans, programs in which it collects premium payments from government employers and workers for use in paying out claims. As such, the EUTF plans have been subject to the same increases in medical usage and costs as other health insurers, prompting a string of premium hikes.

Yesterday, the discussion on how to solve the EUTF's financial woes again exposed a rift between the two groups of trustees, with employee representatives complaining that workers are being asked to shoulder all premium requests.

Trustees split along employer-employee lines when it came to votes on instituting a 22.1 percent increase on July 1 designed to cover rising medical costs and rebuild reserves.

A second proposal, to raise rates 17.7 percent, also failed, as did a vote on a 12.7 percent increase and a measure to extend current rates by six months.

Perreira and other union representatives complained that the state is not helping workers by absorbing some of the higher costs itself. Employer representatives responded by saying the cost split had been set by collective bargaining that was outside the scope of the board's work.

The agreement to extend current rates for three months beginning July 1 was reached after pleas by George Kaho'ohanohano, EUTF chairman and a union representative, and Barbara Annis, a trustee who is deputy director of the state Department of Budget and Finance.

Kaho'ohanohano reminded the board the fund was created to provide a low-cost benefit for employees as government competed for workers with the private sector. He said that advantage is being lost at a time when state workers are being forced to take furloughs, cutting into their pay.

Annis admonished other board members on the need to accomplish something at yesterday's meeting instead of letting the measure wait until the trustees get together again in June.

In the end, the trustees voted to extend the current rates through September while other solutions are explored, including modifying plans by implementing deductible thresholds.