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First wave of health care law takes effect

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by Mindy Aguon

Guam - Provisions of the Patient Affordable Care Act went into effect today.  The policy was touted as putting patients in charge of health and included provisions such as increasing the annual coverage limit from $250,000 to $750,000, providing cost-free preventive services, and prohibiting any denial of coverage and limiting benefits for children based on a pre-existing condition.   

The sweeping health care reform law caused considerable debate in the nation's capitol and while there has been discussion about repealing the law, local insurance companies have been left to come into compliance leaving Guam's insured concerned about the rising costs of health insurance. 

There's been considerable criticism over the rising cost of health insurance for Government of Guam employees.  The Democratic gubernatorial team of former governor Carl Gutierrez and Frank Aguon, Jr. even put out a full-page ad accusing Calvo's SelectCare of increasing rates 300%.

Aguon, the chairman of the Legislative Committee on Healthcare, also filed a complaint with the Securities and Banking Branch at Rev & Tax, asking the insurance commissioner to investigate the negotiations process.  But Calvo's SelectCare health plan administrator Frank Campillo defends the process, saying, "This is the only program in the Government of Guam where full representation of the entire Government of Guam employees and agencies are there to negotiate this program."

The negotiating team included representatives from the Guam Lgislature, the Department of Administration, the Bureau of Budget Management & Research, the Attorney General's Office, the Judiciary and the GovGuam Retirement Fund.  Campillo says the reason for the increases in insurance rates for public sector employees and retirees is twofold: there was a significant utilization by government workers this fiscal year; add to that the additional benefits that insurance companies like Calvo's must now cover due to the Health Care Reform Act.

Responded Campillo, "So when you spend services, when you spend coverage the unintended consequence of that is that you need to charge more. It is no different then when you ask a newspaper or television station to give you a larger ad or a longer ads in television - the television station is going to charge you more."

Every year GovGuam puts out a request for proposal for interested insurance companies to negotiate a new health plan.  A decade ago, employees and retirees had five or six plans to choose from, but for the last three years only Calvo's SelectCare has responded.  

Campillo says that's because the market has become less attractive, noting, "Many want to claim that we are almost a monopoly in the Government of Guam. We are not a monopoly.  GovGuam puts out a request for proposal - that RFP is open to many others to answer."   He added, "We welcome competition.  Competition is good.  And it's something that we have said is good for the island. Unfortunately for the Government of Guam, no one else wants to come into this market."

Companies like Netcare Life and Health Insurance Company used to have a plan with the Government of Guam, but plan administrator Jerry Crisostomo says the company made a business decision to pull out simply because it wasn't profitable.  "The Government of Guam really has no business being fully insured," he theorized.  "They should actually look at being self-funded. They take the risk; because it's such a large gorilla they should take the risk themselves and contract a third-party administrator or an insurance company to administer their benefits."

Crisostomo says the increased rates for implementing the PACA are inevitable.  "The law is, in my opinion, a lousy law.  It needs to be repealed and replaced. Hopefully they'll do that in January, but for now it's the law of the land and we have to come into compliance," he explained.

Calvo's SelectCare meanwhile maintains the rates they negotiated for the coming year are affordable when compared to other jurisdictions in the nation. Campillo stresses that had the company not responded to the RFP, GovGuam workers and retirees would be left emptyhanded, with no health insurance plan at all. He said, "Affordable health insurance is something that is needed and it's something they should have. Get past the politics and realize the benefits that are offered to Government of Guam employees and retirees are great benefits."

Monday, September 27 is the deadline for open enrollment for Government of Guam employees and retirees.

Meanwhile, governor's chief of staff, George Bamba, says negotiations had been ongoing since April of this year and included all branches of government, including the Legislature.  He adds losses incurred during the current health coverage year were reviewed and the premiums sought were justified.  Bamba says the new premiums also include the costs associated with the Obama healthcare plan.

Governor Felix Camacho is expected to sign the contract for the new health insurance plan once he receives it.

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