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PERS outlines history of state health plan, warns unfunded mandates raise future premiums
Summary
PERS officials told the Employee Benefits Committee that the state’s Uniform Group Insurance Program traces to the 1960s, currently covers about 59,000 lives, and that adding unfunded legislative mandates increases future premium baselines; PERS also previewed a June 1, 2026 RFP and an expected carrier decision by late 2026.
Derek Holbein, chief operating and financial officer for the Public Employees Retirement System, told the Employee Benefits Committee that the Uniform Group Insurance Program dates to the 1960s and that since 1979 the state has paid family health insurance premiums for state employees.
“The health insurance fully paid program is the number 1 most important thing to state employees,” Holbein said, citing HRMS survey results. He told lawmakers PERS manages benefit design changes to control costs — for example, steering members to in‑network providers, implementing formularies and using higher deductibles — while also offering member programs aimed at prevention and disease management.
Holbein listed member supports including diabetes management programs, a healthy‑pregnancy program that offers prenatal supports and up to $850 in savings for participants, Silver & Fit access for Medicare retirees and a $250 wellness incentive for each covered person (up to $500 per married couple). He said employers who participate in wellness programs receive a 1% premium discount built into budget assumptions.
On recent mandates, Holbein said some coverage additions have come with small but durable premium effects. He cited a 2025 insulin cap at $25 per month (estimated at about 0.14% of premium) and a 2023 package that included prosthetic device repair and a comprehensive medication‑management program (about 0.66% of premium); he noted those were not funded by the Legislature and instead drew on plan reserves in the short term. “Once it’s part of the plan…it’s then built into the coverage that gets bids,” Holbein said, warning that mandating benefits without appropriations raises future premium baselines.
Holbein also walked members through plan options and enrollment: the grandfathered PPO is the most popular PERS plan; a high‑deductible option with an HSA seed (about $289.36 monthly for family coverage and $119.62 monthly for single coverage) had 1,517 participants as of Jan. 1, 2026, and the overall program covers just over 59,000 lives.
On contracting, Holbein said PERS typically solicits bids to ensure competitiveness even when statute allows longer terms. He told the committee the RFP for the 2027–29 biennium was released to the PERS board and is scheduled to go to market on June 1, 2026; bids would be due by the end of July, staff and consultants would analyze proposals through the fall, and PERS expected to notify legislative counsel and the governor’s budget office when awards and projected premium increases are known.
Holbein emphasized that PERS generally does not add coverage unless the carrier offers it at no cost or it is federal law, and that moving from a grandfathered to a non‑grandfathered plan typically raises premiums by roughly 2 to 2.5 percentage points if the plan design otherwise remains unchanged. He said coverage additions are primarily legislative policy decisions and offered to provide fiscal notes, actuarial detail and supporting materials to the committee on request.
Next steps: Holbein said PERS will provide requested fiscal notes and work with the committee and legislative counsel as the RFP and actuarial work proceed.
