Budget Chair Critical of Governor For Signing Health Insurance Plan Without Forewarning of Higher Costs

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Guam – The Chair of the Legislature’s Budget Committee, Senator Ben Pangelinan, is critical of the Camacho Administration for failing to inform his budget committee beforehand of the potential for higher health insurance rates in the new SelectCare Health Insurance plan for GovGuam employees..

In a release, the Senator states that the amount amount budgeted for health insurance in the FY 2011 budget was based on the Governor’s Executive Budget Request. He says there was never any formal communication or request submitted to the Committee on Appropriations to increase funding for health insurance before the budget was completed and passed by the Legislature and signed by the Governor.

The release quotes Senator Pangelinan as saying: “The Governor’s administration knew about the increase before signing the FY 2011 budget into law. I hope the Governor is not so irresponsible that he would obligate the government to such a significant cost without identifying the funding to make up for any shortfalls.  If not, then it is unfortunate that Governor Camacho followed the suggestion of the negotiating team to accept the increased rates.”

Pangelinan says he has calculated that an additional $16 million dollars will be needed to pay for the new Government share of health insurance premiums for GovGuam employees, except those in the autonomous agencies, such as GPA and GWA.

Last Friday BBMR Director Bertha Duenas said about $20 million is needed to cover the shortfall, including for the autonomous agencies.

The Senator also says that the signing of the SelectCare Health Insurance contract for FY 2011 presents legal questions that must be answered first by the Governor of Guam and possibly the Attorney General because the new contract exceeds the amounts appropriated.

Pangelinan states:  “I do not support reducing tax refunds or eliminating raises to cover the health insurance increase.  The contract that was signed is subject to the availability of funds so my recommendation is that the negotiating team reconvene with the Attorney General and determine how to re-issue the Invitation to Bid for the FY 2011 health insurance.”

The increased costs of  GovGuam’s share of the health insurance premium “assumes 5% of those insured at the end of FY2010 will not sign up for insurance in FY 2011 due to the large rate increase.” He says that means that the new SelectCare Health Insurance plan for GovGuam emp0loyees “may cost the government even more in the long run in crisis care for uninsured families.”

Pangelinan adds: “A 40% increase to any operation for health insurance is not sustainable, especially in an organization as large as the Government of Guam.  I just don’t understand the rationale for accepting such a large increase when other alternatives were available such as arbitration or re-issuing the Invitation to Bid using retrospective rating.”

The Office of Finance and Budget’s review shows only two appropriation items with any flexibility that are large enough to cover the health insurance increase to be either lowering the amount of tax refunds paid from the budget or eliminating the Hay Study appropriation that gives raises to government employees.