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A JOINT RESOLUTION directing the Department of Employee Insurance in the 1
Personnel Cabinet to study and report to the Legislative Research Commission on 2
employer a nd employee cost -sharing trends, health insurance expenditures and trends, 3
health plan governance models, and administrative processes and costs associated with 4
the Kentucky Employees' Health Plan and other state employee plans across the country. 5
WHEREAS, the Kentucky Employees' Health Plan (KEHP) provides health 6
benefits to nearly 300,000 current and former public employees and dependents; and 7
WHEREAS, KEHP expenditures for providing health benefits to current and 8
former public employees have increased fr om $1.6 billion in plan year 2019 to $2 billion 9
in plan year 2023, and are on track to exceed $2.5 billion in plan year 2025; and 10
WHEREAS, increases in KEHP health benefit expenditures are anticipated to 11
significantly outpace budgetary growth due to a 24 p ercent increase in premium costs 12
over the next budget biennium; and 13
WHEREAS, the majority of the KEHP health expenditures and increases in 14
historical expenditures are funded by state tax dollars appropriated by the General 15
Assembly; and 16
WHEREAS, national health expenditures are expected to outpace GDP growth over 17
the next 10 years, resulting in over 20.3 percent of GDP in 2033, and is an issue facing all 18
employers, including state governments across the nation; and 19
WHEREAS, studying the data and trends in t he KEHP plan as well as studying the 20
health care plans of other states is a critical step in ensuring healthy and productive plan 21
members and cost containment for KEHP members and employers; and 22
WHEREAS, the General Assembly is committed to providing an af fordable and 23
sustainable health plan to current and former public employees; and 24
WHEREAS, ensuring the long-term financial viability of the KEHP is a shared goal 25
of participants, the General Assembly, and the taxpayers of the Commonwealth of 26
Kentucky; 27
UNOFFICIAL COPY 26 RS BR 2262
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NOW, THEREFORE, 1
Be it resolved by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. (1) The General Assembly hereby directs the Department of 3
Employee Insurance in the Personnel Cabinet to conduct a study in coordination with 4
their outside consultants and file a report to the Legislative Research Commission that 5
provides data and analysis on the following: 6
(a) The current summary and data of KEHP as of the 2025 plan year, with data 7
and analysis of previous plan years, including: 8
1. A brief summary of current plan offerings and designs, plan membership 9
characteristics by group, administrative structure, a detailed process and timeline for how 10
plan benefit and cost decisions are made prior to open enrollment, and who provides 11
input into the plan's design before it becomes public; 12
2. A description of the history and reasoning why KEHP moved from a fully-13
insured model to a self -insured model, and the benefits, obstacles, and costs or savings 14
from pursuing a fully-insured model; 15
3. A five-year trend analysis on medical claims, pharmacy claims, administrative 16
expenses, and total expenses; 17
4. A five-year trend analysis by year on the share of costs paid by participants 18
and employers; 19
5. A financial analysis and attribution of the factors that have resulted in the 20
increased plan costs over each year of the five-year period; 21
6. A listing and analysis of t he top 25 prescription drug expenditures by product 22
name for each of the last five years that includes the product name, therapeutic class, net 23
prescription drug payments as a dollar value and percentage of all prescription drug 24
claims, net payment per pre scription, prescriptions filled, patients, and other relevant 25
data; 26
7. A listing and analysis of the top 25 medical claim expenditures by clinical 27
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condition for each of the last five years that includes the general clinical condition, net 1
medical payments by condition as a dollar value and percentage of all medical claims, net 2
costs per prescription, and other relevant data; 3
8. A listing of all third -party vendors used by the plan over the last five years, 4
the type of service provided by the vendor, and pay ments made to each vendor by year 5
over the last five years; 6
9. Each action taken by the plan over the last five years to reduce plan 7
expenditures and the actuarial or financial impact of each decision on plan costs; 8
10. Potential actions evaluated but not taken by the plan to reduce plan 9
expenditures and the impact of those actions on plan costs, including any actuarial or 10
financial analysis or reports; 11
11. A listing of any statutory provisions that limit the ability to modify plan 12
design; 13
12. Any actions t aken in the last five years to review the effectiveness of the 14
KEHP pharmacy benefit manager to optimize prescription drug spending over time and 15
protect the health of KEHP participants; 16
13. A 10-year projection of plan costs by the plan's consultants for plan year 2027 17
and beyond; and 18
14. Attachments that include any actuarial or financial analysis or reports used to 19
evaluate plan options, plan changes, and costs for the 2026 plan year and beyond; and 20
(b) A state-by-state survey that compares other states to KEHP in terms of: 21
1. The governance models used to determine and evaluate plan benefits and 22
costs and any statutory or regulatory requirements that limit future plan costs when 23
establishing plan design; 24
2. Whether the plans offered to state employees are: 25
a. Self-insured or fully insured; and 26
b. More or less expensive than KEHP, with an explanation for the difference in 27
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cost; 1
3. The types of groups included in the plan, including but not limited to state 2
employees, school employees, local government employees, and retirees; 3
4. The plan year and whether the plan operates on a calendar -year basis or a 4
fiscal-year basis; 5
5. Any laws, administrative regulations, or policy mandates that provide for 6
cost-sharing requirements or other mechanisms to cap health in surance costs on state 7
employee health insurance plans; and 8
6. Key actions taken by other states to limit the growth of costs to plan 9
participants and employers. 10
(2) The department shall submit the report and survey mandated by subsection (1) 11
of this section to the Legislative Research Commission by December 1, 2027. 12