State insurance officials warn EGI premiums will rise; former manager says reserves are dangerously low

State officials told the Joint Appropriations Committee that the Employee Group Insurance (EGI) program will require premium increases for 2027 after unusually high claims this year. Director Trisha Bach (Department of Administration and Information) and EGI program manager Karen Williams said the RFP for core benefits has concluded, contract work is underway, and actuarial rate projections will be available in mid‑July.

Karen Williams explained the program’s costs have risen because utilization and high‑cost drug claims are increasing: administrators cited a double‑digit decline in member cost share for some pharmacy claims, meaning the plan is paying more of drug costs than before. “We pay 4 cents out of every dollar to administer the program,” she said, emphasizing most premium dollars are paid to claims. The final rate proposal will be coordinated with the governor’s office and could be part of a supplemental request if actuarial projections require higher appropriations.

Former EGI program manager Ralph Hayes testified in public comment that reserves dropped from the policy floor and warned of insolvency risk: he said reserves fell roughly 60% over a 27‑month span and that the program could be in a bankruptcy‑level fiscal position by 2027 without corrective rate action. "We're not actually putting the rate increases in place to keep the program financially solvent," Hayes said, urging more transparent, actuarially grounded rate decisions and stronger legislative oversight.

Committee members discussed retiree subsidy adjustments (current statutory credit set in 2007–08 and now worth less in real terms), the potential impact of school districts opting into EGI, and whether the Department of Insurance should play a larger role in oversight. Department staff said they regularly provide monthly balance reports to JAC and will return with more detailed actuarial information in mid‑July; they also recommended possible supplemental requests if reserves and projected claims require additional state funding.

What happens next: EGI staff will provide actuarial rate projections in mid‑July; the committee may see a supplemental request or plan design changes in August, and staff offered to supply additional reserve and retiree‑subsidy analyses at the next meeting.