State of Hawaii: Pharmacy Program will Save $24 Million in First Year of Contract

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HONOLULU, HAWAII – The Employer-Union Trust Fund (EUTF) has completed the periodic process of selecting providers of life, vision, dental, medical and pharmacy insurance—with significant savings for employers, active employees and retirees. Health benefit plan designs will remain the same.  New contracts with these providers will be effective January 1, 2012.

The EUTF is the administrator of health and other benefit plans for state and county employees and retirees.


“Healthcare costs are soaring, and employers and employees are sharing the burden of paying more,” said George Kahoohanohano, EUTF Board Chairperson. “In reviewing the insurance plans and providers, the EUTF Board sought to contain costs and find some relief for active and retired employees, as well as their state and county employers.”

EUTF’s contract for preferred provider medical insurance (PPO) will be with Hawaii Medical Services Association (HMSA).  The new contract will be a fully insured arrangement, which means that costs to EUTF are capped and HMSA pays all claims—even if costs exceed the cap. If costs are lower than anticipated, HMSA will refund any premium surplus to EUTF. Under the old self insured PPO contract with HMSA and Hawaii Medical Association, EUTF was responsible for paying all claims by members.

Other adjustments include:

·        A 10% reduction in dental rates with Hawaii Dental Service
·        Change in Life insurance carriers to Royal State National Insurance Co. with an increase in the amount of Life insurance provided
·        Change in the pharmacy benefit manager (PBM) for the prescription drug coverage.  The new PBM will be CVS Caremark which also owns Longs Pharmacy.  The pharmacy change alone is anticipated to generate savings—to be shared by employers, employees, and retirees—of approximately $24 million in the first year alone.

The vision insurance provider, Vision Service Plan, and vision insurance rates remain unchanged.

Details regarding the new PBM and providers of life, vision, dental, and medical insurance are attached.