On Monday, August 18, the Joint Labor Management Committee met to learn the details of 2024 and 2025 healthcare spending across the SEGIP plans. That information is correlated with analysts’ expectations of near-term spending trends to arrive at the healthcare premium expenses for 2026. National healthcare spending– and healthcare spending trends within SEGIP – have risen by rates not seen since 2012, and health insurance premiums have to cover these spending increases to ensure the solvency of our plans.
On average, SEGIP members needed more care, and costlier types of care, than they did previously.
In 2024 and so far in 2025, every area of healthcare spending (inpatient, outpatient, pharmacy, mental health, etc) has seen increases. Claims paid by state plans were $55 million higher than forecast. And forecasts for the remainder of 2025 predict more growth in spending. The frequency of “high-cost cases”, situations where a member incurs more than $75,000 in charges in a year due to something like a cardiac or cancer event, has surged; and the expense of each high-cost case has increased more than predicted. Mental health and substance abuse treatments increased 31% from 2023 to 2024, the last period for which data was available. And GLP-1 weight loss drugs account for an extra $43 million in new spending. In total, SEGIP now spends more than $1.1 billion for healthcare for state employees and their families.
The premiums we pay must cover these costs. If there is good news, thanks to the bargaining from MAPE and AFSCME, the proportions of the premiums paid will remain the same; the increases in premiums will be paid mostly by the employer. Employees on “single” and “family” coverages will continue to pay 5% or 15% of the total premiums, respectively. Compared to the state’s proposal to have employees bear the new costs, this represents a success.
Nonetheless, the increases in spending are driving a premium increase of 17% for 2026. Employees on single plans will see increases of approximately $7 per month and those on family plans will see increases of approximately $49 per month. The combination of factors – higher-than-expected spending in the last two years, and higher-than-average expected spending growth – results in this increase to ensure that SEGIP has sufficient funds to pay expenses. This increase includes a responsible drawdown in the plan reserve funds to buffer the premium increase.
Changes to other benefit premiums are not final but are expected to be not significant. Dental coverage is expected to increase approximately 5% and optional life insurance should not see any change.