Committee examines bill to align state employee health plan with ACA to curb premium growth

Senator Jonathan Warrie, representing District 22, presented Senate Bill 2160 to the Appropriations Committee, saying the measure would "revise the definition of health insurance benefits coverage to be a non grandfathered plan." The bill would align the state employee plan with the Patient Protection and Affordable Care Act and let PERS (Public Employees Retirement System) change plan mechanics such as maximum out-of-pocket levels.

Supporters told the committee they expect the change to create options to slow premium growth. Warrie and the bill author, Senator Kyle Davidson, cited industry bid data indicating a potential offset between higher benefits and lower premiums: Davidson said the state’s next bids could push implementation to 2027 and that while the fiscal note lists an increase in benefits of roughly $27 million over a full biennium, the official fiscal note for the '27–'29 biennium showed about $6.6 million because the bill’s timing would affect only a partial biennium. Warrie said the committee spent substantial time on the bill and gave it a 10–3 due-pass recommendation.

Committee members pressed for fiscal clarity. Derek Holbein, chief operating and financial officer for PERS, explained the funding mechanics discussed: based on estimates, the full biennium cost of the expanded benefits was about $28 million, but because implementation was moved partway into the next biennium the six-month cost would be roughly $7 million. Holbein said that mix would be covered partly from the health insurance premium reserve (he cited a $55 million reserve balance) and partly through a one-time appropriation: "to get to that $7,000,000... it's made up of a combination of paying for some of it from the reserves, the $4,300,000 and then the remaining part coming through an appropriation," he said.

Holbein and other witnesses emphasized that the plan change itself does not automatically change the PERS board’s decisions on premiums or out-of-pocket design; it gives the board more flexibility to adjust plan mechanics if the legislature funds premiums at a particular level. Holbein summarized the trade-offs: if bids produce higher premium requests than the legislature funds, the PERS board would have to adjust plan design (for example, deductibles and maximum out-of-pocket amounts) or use reserves.

Insurance Commissioner John Godfrey and his office provided scenario-based testimony meant to illustrate how counting co-payments toward the out-of-pocket maximum and adding preventive benefits would affect families who currently face recurring therapy co-payments or multiple household claims. Godfrey said the office supports the change as something that could align state benefits with what many employees expect from private-sector plans and said the scenarios show both winners and losers depending on utilization.

Lawmakers asked about worker impacts. Multiple representatives asked whether the change would effectively shift costs to employees by increasing deductibles or out-of-pocket maxima. Davidson and Holbein reiterated that the change is a tool: the PERS board would decide specific plan design changes, and the legislature would determine how much of any premium increase it would fund. Representative Martinson said the change “looks to me like it’s a backdoor approach to have the state employees pay part of the premium”; Holbein and Davidson responded that total system cost does not change and that any savings to the state would require some cost-sharing choice between premiums and utilization exposure.

Committee members also asked for a corrected fiscal note. Committee staff agreed to prepare a revised fiscal note that reflects the appropriation language and reserve use discussed during the hearing.

The bill’s next procedural steps were not taken in the Appropriations meeting; committee members closed discussion after the fiscal-note clarifications and scheduling comments.

Ending: The committee heard detailed fiscal and policy testimony and asked agencies for a revised fiscal note before further action. The record shows the bill received a 10–3 due-pass recommendation from the committee that considered it earlier; the Appropriations Committee discussion focused on the timing of implementation, the interplay of reserves and an appropriation to cover partial-year costs, and the PERS board’s future plan-design choices.