IBNL reopens debate on SB2160 to consider ending ‘grandfathered’ state health plan

Representative Koppelman moved and the Industry, Business and Labor Committee approved a motion to reconsider its earlier action on Senate Bill 2160, reopening discussion of a measure that would remove the state employee health plan’s “grandfathered” status and require coverage that mirrors Affordable Care Act benefits.

The motion to reconsider was made by Representative Koppelman and seconded by Representative Casper; the committee carried the motion by voice vote. The committee then heard about a half hour of testimony and questions from lawmakers and staff but did not take a final vote on SB2160 at this meeting.

Why the committee reopened the bill: Representative Koppelman said he had missed part of the prior hearing and, after reviewing additional material, wanted the committee to reexamine the measure. “I’ll move that we reconsider our actions on senate bill 2,160 and I was absent,” Koppelman said when making the motion. Senator Kyle Davidson, sponsor of SB2160, told the committee the bill would expand benefits for state employees and cited a Deloitte actuarial fiscal estimate the committee was using for its discussions. “We know that state employees are gonna get $27,000,000 more in benefits over the next biennium,” Senator Davidson said, describing that figure as the actuary’s projected increase tied to adopting ACA-style benefits.

What the bill would change and the fiscal picture: SB2160 would move the state’s main employee health plan from a grandfathered large-employer option to a non-grandfathered plan that must include benefits required under the Affordable Care Act (ACA). Senator Davidson and others said the fiscal note shows an increase in benefits costing roughly $6 million for the last six months of the current biennium and about $27 million over the following two-year biennium; the committee discussed both figures as part of the same fiscal projection. Committee members repeatedly asked where that cost would be covered. Davidson and staff described plan-design changes — higher deductibles, higher out-of-pocket maximums and changes to coinsurance — as the primary levers to offset increased benefit costs.

PERS staff described the operational and timeline effects. Rebecca Fricke, executive director of the Public Employees Retirement System (PERS), said the bill as drafted would take effect Jan. 1, 2027, meaning the plan would be non-grandfathered for the last six months of the current fiscal note period. Fricke said PERS would run a competitive bid process and that the board would set the plan designs sent to market. “Strictly from a benefit perspective for employees, the Affordable Care Act-required benefits are enhancements to employee coverage,” Fricke said, adding that plan-design choices will determine how much cost shifts to members.

Key numbers and design trade-offs discussed by the committee: Several lawmakers and PERS staff described specific plan attributes as examples of how the state could balance costs and benefits. - Current PERS figures discussed in committee: an individual deductible of $500, family deductible $1,500, and maximum out-of-pocket amounts of $1,500 (individual) and $3,500 (family). - Committee discussion noted that only about 7% of members hit the current maximum out-of-pocket in the cited measurement period; lawmakers repeatedly used that percentage when weighing who would be affected by any higher out-of-pocket levels. - Senator Davidson said moving to non-grandfathered status could let the state realize lower vendor bid prices through plan-design changes and estimated a typical bidder-side premium reduction of 5–7% in some scenarios; he illustrated that with a hypothetical future premium base and estimated savings of $42 million at a 6% reduction as an example of potential offset. - Rebecca Fricke said PERS had requested bid options in previous cycles and that the board would include multiple plan designs in the next RFP; she noted some plan-design adjustments can be made while remaining grandfathered but that the non-grandfathered option gives broader flexibility, such as higher allowable out-of-pocket ceilings under ACA rules.

Concerns raised and context: Lawmakers pressed on several risks and unknowns: the immediate cost in the near term, the long-term trajectory of medical inflation, the potential to require employee premium contributions under ACA rules, and the treatment of political subdivisions that participate in PERS. PERS staff said the proposed change would affect only state employees and non–Medicare retirees; political subdivisions would keep access to the grandfathered plan unless the bill explicitly included them.

What the committee directed or decided: The committee approved reconsideration of SB2160 and held an extended question-and-answer session with Senator Davidson and Rebecca Fricke. No final committee vote on the underlying bill occurred at this meeting. Committee leadership said PERS would be asked to provide additional bid and plan-design information for the committee to review when it reconvenes later the same day after floor activity.

Votes at a glance: - Motion to reconsider committee action on Senate Bill 2160: mover — Representative Koppelman; second — Representative Casper; outcome — motion carried (voice vote). The committee did not take a final vote on SB2160.

The committee adjourned to reconvene after floor session for further consideration and additional information from PERS and bidders.