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Governor Gregoire Announces Washington Reduces Health Care Costs

For Immediate Release: July 17, 2007

Anticipated savings to state employee program is $192 million

OLYMPIA - Governor Chris Gregoire today announced that the Public Employees Benefits Board (PEBB) has approved rates for state employee health care in 2008. The new rates reflect a dramatic reduction in growth rates from past years.

The total cost in 2008 of providing health care to state employees is projected to increase only 3 percent from current year rates. The growth trend in 2005 was 11 percent. If that trend had continued, the 2008 costs would be $192 million more than the current projection.

“These numbers show that the state is beginning to get a handle on rising health care costs. Just two years ago, health care costs for state programs were growing 2 to 3 times faster than the state’s revenue,” said Governor Gregoire. “When I came into office, I recruited health care leaders who shared my vision of improving access for children, reducing costs through improved management and maintaining the current level of benefits. We are accomplishing that goal.”

Health Care Authority Administrator Steve Hill said the savings occurred by changing the plans offered to state employees and an improved negotiation process with contracting health plans – not by reducing benefits to employees. “While we’re seeing some reduction in the growth rate of health care costs nationwide,” he said, “most are in the 5 to 6 percent range. We are quite pleased to be able to hold the trend down to 3 percent.”

The PEBB program, administered by the Washington Health Care Authority (HCA) determines health care benefits to nearly 325,000 Washington residents, including state employees, retired state employees, retired teachers and their dependents.

Governor Gregoire said the efforts by the HCA and PEBB reflect the state’s commitment to prudently manage state resources.