Governor Tate Reeves@tatereeves
Today, Senate Bill 2140 – the Mississippi Prior Authorization Reform Act – will become law without my signature.
You may recall, last year, I vetoed Senate Bill 2622 – also named the Mississippi Prior Authorization Reform Act. I outlined in my veto message a few correctable flaws in the bill that had the potential to create significant negative unintended consequences. Over the Summer and Fall, I charged my staff with assembling a group of stakeholders to determine the best way to address these flaws, and recommendations were provided to members of the Legislature prior to the start of the 2024 Legislative Session. Through the legislative process, almost all of the flaws in the prior bill were addressed in Senate Bill 2140. I want to specifically thank Chairman Sam Creekmore, House leadership, and others for their efforts to amend Senate Bill 2140 to address these concerns.
The bill that is before me today is a significant improvement over last year’s bill. However, Senate Bill 2140 differs in one significant way from its predecessor – it adds the Mississippi State and School Employees’ Life and Health Insurance Plan (aka State Plan). The State Plan provides health insurance coverage for almost 190,000 state employees and their families. Currently, the State Plan is funded almost exclusively through the premiums paid by its insureds. This means that every dollar in increased administrative and benefits costs imposed on the State Plan as a result of Senate Bill 2140 will be passed on to state employees and their families through premium increases.
While the price of a medical procedure generally remains stable over a period of 60 to 180 days, the price of pharmaceuticals can fluctuate wildly during that same period. Senate Bill 2140 limits the ability of the State Plan to quickly adjust the pharmaceuticals covered under the State Plan. This means that the State Plan will be required to provide coverage for more costly drugs despite the fact that cheaper equivalent drugs may come to market or become available. Senate Bill 2140 also requires the State Plan to continue to provide coverage for pharmaceuticals taken by new state employees for a period of at least 90 days after beginning their employment with the state. This is despite the fact that such pharmaceuticals may not be covered under the State Plan and cheaper alternative equivalents are available.
Based on historical data, the cost increase for pharmaceuticals alone to the State Plan has been conservatively estimated to be between $30 million and $110 million per year, with one estimate coming in at $140 million per year. These cost estimates were provided to the Senate prior to its concurrence in the House’s amendments to Senate Bill 2140. Absent additional legislative action, such increased costs will be passed on to every state employee and their families. This includes every teacher, university professor, corrections officer, road crew member and social worker.
Assuming an increased cost to the State Plan of just $30 million annually, every person covered under the State Plan will see their premium increase by approximately $158 a year, or $632 for a family of four. Assuming an increased cost of $100 million annually, every person covered under the State Plan will see their premium increase by approximately $526 a year, or $2,104 for a family of four. State employees should not receive the equivalent of a pay cut as a result of the passage of Senate Bill 2140.
Over the past couple of years, Mississippi has made significant gains in closing the pay gap between private and public sector employees. Senate Bill 2140, however, represents a step in the wrong direction and will have the likely unintended consequence of widening that pay gap again.
The Legislature, of course, has several options to address this concern: 1) pass legislation this session before Senate Bill 2140 becomes effective to remove the State Plan from its scope, or 2) make a commitment to provide an annual appropriation to the State Plan to cover the increased costs to the State Plan as a result of Senate Bill 2140. I hope we can agree that such increased costs should not be borne by state employees and their families.
I am allowing Senate Bill 2140 to become law because I agree that it is a significant improvement over its predecessor and that reform of the prior authorization process is much needed. That being said, I cannot put my signature on this bill because of its potential effects on the premiums paid by state employees.
I strongly encourage the Legislature to address this one major issue before Senate Bill 2140 is fully enacted.
