While many low-income earners in the private sector are unable to afford insurance policy for themselves, they are paying for a majority of the burgeoning insurance cost incurred by the government of Guam.
In the past four years, GovGuam has been generously shouldering 79 percent of the subscribers’ insurance premiums, which is well over the 50 percent minimum requirement under the law. As a result, GovGuam spent $62 million more than it should have.
While GovGuam is covering a generous portion of the insurance cost, records suggest it has not been collecting the correct reimbursements from insurance providers “due to the lack of monitoring,” the Office of Public Accountability said in a report released Monday.
From 2014 to 2017, GovGuam subsidized $275 million of the $347 million total health insurance premiums, OPA said. The subscribers paid only $71.4 million, or 21 percent, of the total cost.
GovGuam’s share went up from $56.9 million in fiscal year 2014, to $66.8 million in 2015, $75.6 million in 2016 and $76.3 million in 2017.
“For every 5 percent that (GovGuam) shared above the 50 percent minimum requirement by law, the government added $5 million annually to its cost,” OPA said.
Public Law 34-83, which is in effect for FY 2019, is designed to lower GovGuam’s overall insurance cost by allowing subscribers to choose among various providers.
But OPA predicted that the law is not likely to give the intended result because “the vast majority of subscribers do not select the lowest cost option.”
The retirees account for 32 percent of total enrollees but their medical premiums account for more than half or 55 percent of the total medical premiums, OPA said.
OPA said this was the result of separate negotiations for retirees and employees’ insurance policies, in which retirees’ premiums were significantly higher than the active employees’ share because they use more of the health insurance.
“However, we found that the actual retiree premiums were $3,839 or 35 percent higher than their claims,” OPA said.
In FY2017 alone, the average annual total medical premium for a retiree was $12,530, of which the government shouldered $11,561 or 92 percent. In the same year, the average annual medical premium for an active employee was $4,523, of which the government shouldered $3,214 or 71 percent.
“Despite paying higher premiums compared to the Guam Judiciary and the federal government, we also found that GovGuam might not be receiving the correct refunds from the health insurance contracts due to the lack of monitoring,” OPA said.
OPA noted a $5 million discrepancy between the premiums and claims compiled by GovGuam’s external consultant and the accounting submitted by carriers.
The discrepancy suggests that GovGuam might not be collecting the accurate refunds “because no one at the Department of Administration is reviewing the reasonableness of claims and accounting received.”
“DOA relied heavily on the external consultant to compile information for the next RFP,” OPA said. “As a result, there is a risk that GovGuam is accepting incorrect amounts of refunds or not receiving refunds when it should be.”