By Oyaol Ngirairikl
There’s a slow but seemingly steady interest by Guam employers to adopt self-insure group health plans. It’s one of the changes we’re seeing in Guam’s insurance landscape, according to industry leaders.
That interest mirrors the trend nationally.
The Government of Guam’s self-insurance for medical and dental care for employees and retirees, and their families, is the largest example of such an adoption. Edward M. Birn, director, Department of Administration says the government anticipates saving taxpayers anywhere from $5 million to $14 million for fiscal 2024.
GovGuam switched to self-insured medical and dental health programs for the first time effective this fiscal year, which started Oct. 1, 2023, and ends Sept. 30.
Self-insurance isn’t new to Guam, says Jerry Crisostomo, plan administrator and Health Plans manager for NetCare Life and Health Insurance Co. There are other local companies that either started self-insuring or are now interested as they’ve seen more companies, and now GovGuam, adopt this group health plan model.
“In the U.S. market, over 62% of employers with 100 or more employees are self-funded. Although Guam is somewhat behind in this transition, the self-funded concept has indeed garnered serious interest from Guam employers since the fully insured program has become financially unsustainable and unaffordable with premium increases escalating each year at double digit rates,” Crisostomo says.
To self-insure means the employer, in this case GovGuam, pays medical claims and fees directly out of government funds.
By comparison, the more traditional fully insured plan requires the employer to pay a fixed premium to a third-party insurance carrier that covers the medical claims. These third-party carriers handle services such as enrollment, claims processing, and provider networks with a third-party administrator, or they can be self-administered.
GovGuam contracted SelectCare to administer medical and pharmacy benefits while NetCare administers dental benefits.
Gov. Lourdes A. Leon Guerrero in an effort last year to secure passage of legislation allowing GovGuam to self-insure, said according to the third-party actuarial report provided by Milliman, total premiums were predicted to go up by 15%. However, by self-insuring the health insurance coverage, employee and retiree premiums for those who had SelectCare at the time would see a decreased cost, and premiums for those who had TakeCare would see an increase by 5% to 8% compared to 15%.
She said the model allows GovGuam to “save more money on health insurance in the long run, while improving the benefits we provide to our employees and their families.”
A little more than five months into fiscal 2024, Birn says the program is “going well.”
“Our concerns at the start was that certain providers were not going to participate but in the event, participation was good,” he says.
“Our estimated cost of the program for FY24 was between $110 million and $120 million. Projected savings (over a fully insured plan) are between $5 million and $14 million. We are only five months into the program, but it is going well so far.”
Lt. Gov. Joshua F. Tenorio says the government plans on continuing with the self-insurance plan as its prepare for the fiscal 2025 budget and with it the insurance program.
Birn says DOA will recommend it continues in fiscal 2025 because the government “gets the insurance program that we want and one that fits the needs of our employees and retirees.”
This was probably the largest but not the only change in the insurance industry for the government of Guam. In 2023, Guam joined the National Association of Insurance Commissioners, providing an electronic system that enabled insurance departments of U.S. states and territories to more efficiently and effectively process license applications, renewals, inquiries, complaints, and enforcement actions to remain compliant with national uniformity initiatives.
Another change, that raised eyebrows in this last year, was Tokio Marine Pacific Insurance’s announcement that the company was leaving Guam and Saipan (See the Marianas Business Journal story, “Major insurance underwriter to leave Guam and the Northern Mariana Islands,” on www.mbjguam.com
Tokio Marine was the underwriter for carriers Nanbo Insurance, TransPacific Insurance Brokers Corp. and Calvo Insurance’s SelectCare Health Plan. There were concerns that the company’s departure would be lost capacity for Guam.
Not long afterwards, Calvo Enterprises Inc. and Calvo Trusts Corp., collectively called Calvo’s SelectCare, announced their successful acquisition of Tokio Marine. The name was formally changed to Calvo’s SelectCare Insurance Inc.
In a press release, Calvo Enterprises board directors Leonard P. Calvo, Eduardo “Jake” Calvo, and former Gov. Edward “Eddie” Baza Calvo said they expect the acquisition to “contribute meaningfully to the health of the Pacific Island communities of Guam, the Commonwealth of the Northern Mariana Islands, and The Republic of Palau.”
Another underwriter, Aviva, pulled out of the Mariana Islands in 2003, Century Insurance stepped into the role of underwriter in 2004 for Aon in Guam and Saipan, according to Journal files, and has successfully been doing business since then.