HB 4572 analysis
An Analysis of the Hard Cap The hard cap proposed in House Bill 4572 shifts nearly all of the costs of serious and catastrophically-expensive illnesses such as heart attacks, strokes, premature babies, and leukemia and other cancers to public employees and their families. Even when a health plan is successful at keeping a group’s medical claims cost trend down to 5%, the cost of one or two catastrophic illnesses such as cancer, heart attack, stroke or a premature baby will quickly make the coverage unaffordable for the employees. With experience-rated and self-insured plans, a cap shifts almost all of the cost and risk of a catastrophic sickness to the employee group. Hard Cap Base Year Typical group: 150 employees Annual cost: $2,400,000 Cost per employee: $16,000 Hard Cap: $15,000 per employee Employee share: $1,000 per employee Hard Cap Year Two Same group: 150 employees Cost trend: 5% x $2,400,000 = $120,000 ($2,520,000 total base) Catastrophic claim: Preemie baby requiring neonatal care: $300,000 Annual cost: $2,820,000 Cost per employee: $18,800 Hard Cap: $15,300 (2% inflation) Employee share: $3,500 per employee Hard Cap Year Three Same group: 150 employees Cost trend: 5% x $2,520,000 = $126,000 ($2,646,000 total base) Catastrophic claims: 2nd year care for preemie: $50,000 Leukemia diagnosis: $350,000 Annual cost: $3,046,000 Cost per employee: $20,307 Hard cap: $15,606 (2% inflation) Employee share: $4,701 per employee Hard Cap Year Four? Five? Six? In only two years an employee’s share more thanquadrupled, increasing by 470%. What will happen in years four, five, six and beyond?
