Committee advances technical change to PSPRS cancer insurance administrative cap (House Bill 2013)

Committee advances technical change to PSPRS cancer insurance administrative cap (House Bill 2013)

The Arizona House Committee on Public Safety and Law Enforcement on (date not specified) voted to give House Bill 2013 a due-pass recommendation, 15-0, after hearing testimony that the measure is a technical fix to how administrative expenses are calculated for the Public Safety Personnel Retirement System’s (PSPRS) cancer insurance plan.

Supporters said the change replaces a formula based on monies deposited into the plan’s trust (a number that can vary with investment returns) with a five-year average of total claims paid, and removes claims-processing costs from the administrative cap. That, they said, makes the administrative cap a more stable, “relative” number without changing benefits.

Diane McAllister, speaking for PSPRS, described the plan’s evolution and reserves: “When we first created the cancer insurance plan... it was originally a fully insured plan. ... Later we then turned this into a self insured plan. It's a very, very healthy self insured plan. We have over $25,000,000 in the reserve.” McAllister said the bill “changes it instead of being based off of a volatile number ... we're basing it off of actual total claims paid averaged over 5 years.”

Sponsor Representative Livingston called the bill a technical, agency-request measure and said the change is not expected to add cost to the system. Representative Collin pressed staff and the PSPRS spokeswoman for clarity about what would change in practice; McAllister reiterated the bill “does not change the benefit structure of the cancer insurance plan at all” and that administrative salaries, actuaries and legal remain part of administrative expenses while “processing of the claims” would be exempted from that cap.

Committee members also asked about governance and investment oversight. McAllister said the administrator manages day-to-day operations but does not unilaterally set investments: an investment team and an investment committee of board members oversee investments for the roughly $21,000,000,000 fund.

The committee’s motion to return the bill with a due-pass recommendation passed on roll call. The committee record shows the motion carried with 15 ayes and no nays.

House Bill 2013 now moves to the next committee or the House floor (next steps not specified in transcript).