STATE Rep. Jason Murphey, a Guthrie Republican who takes seriously the idea of reducing state spending, believes Oklahoma government could achieve significant savings on state employee health insurance by adopting Indiana reforms. Unfortunately, the up-front costs may be financially unfeasible in the short run, while Obamacare regulations may prevent savings in the long run.
Currently, Oklahoma self-funds state employees' health insurance coverage; the money designated for that purpose is pooled and invested. Murphey suggests using the insurance pool's investment income to fund health savings accounts (HSAs) for state workers while encouraging employees to also use high-deductible policies. Workers would use the HSAs to pay out-of-pocket expenses that occur before their deductible is met. Murphey argues the proposal would make state workers more cost-conscious and ultimately save state funds. Based on the experience in Indiana, he's probably right.
Under the Indiana plan, the state deposits $2,750 per year into an employee's HSA and also covers the employee's insurance premium. Unused funds in the HSA account remain the employee's property. By 2010, the average Indiana employee had $2,000 (and growing) in an HSA account, helping further protect against the financial impact of future health crises.
In a 2010 Wall Street Journal op-ed, then-Indiana Gov. Mitch Daniels noted that state employees using the HSA option would save more than $8 million compared with their counterparts in a preferred provider organization. At the same time the plan effectively increased workers' take-home pay, it reduced Indiana state government's total costs by 11 percent.
The plan proved popular with state workers. By 2011, more than 85 percent of Indiana state workers chose the HSA option. It turns out people like programs that save them money and increase consumer control.
The challenge for Oklahoma is funding the HSAs. Some officials argue federal laws won't allow state government to use the insurance pool's investment funds in that fashion, although that's a point of contention. If the critics are correct, the cost of establishing state-employee HSAs would be nearly insurmountable. Without the use of the investment funds, state lawmakers would be hard-pressed to divert money from other needs given the many other financial demands facing state government.