State workers may see big hike in health plan

Tuesday, Sept. 19, 2000 | 10:54 a.m.

CARSON CITY -- A potential change in the state health insurance plan could mean major increases in monthly premiums for retirees, some boosts as high as 32 percent.

"This is absolutely a killer for retirees," Marty Bibb, executive director of the Retired Public Employees of Nevada, said.

The change, proposed by a new actuarial consultant for the public retirement system, would split active state workers from retirees when computing losses and setting rates.

Since those on pensions traditionally have higher medical bills, their premiums could escalate more rapidly than those of younger, active workers.

The board of directors of the Public Employees Benefits Program heard the proposal from consultants of the Segal Co. and will meet later this month to decide whether to follow the advice.

The consultant was hired by a new board of directors put in place after the health insurance plan approached insolvency last year. The Legislature had to pump $26 million into the system to keep it afloat. The health plan has started to regain its balance.

There are 15,000 active workers covered by the system, and about 5,000 retirees, not including dependents.

"This drives a wedge between active and retirees," Robert Gagnier, director of the State of Nevada Employees Association, said Monday. "We hate to see that."

But, Gagnier noted, if the rates are not increased for retirees, then active workers would face higher premiums for their family members.

Segal proposed a 9.8 percent increase in premiums for active state workers effective July 2001, at a cost to the state of $15 million over the next two years. The state pays the total premium for its workers, but employees pick up the cost for family members.

The Segal recommendation is a 4 percent increase for dependents, which Gagnier estimates at between $5 and $10 a month.

Under the Segal plan, the insurance premium for an early state retiree and spouse would jump 21 percent from $651 to $789 a month. Retirees with children would go from $596 to $789 a month, or 32 percent.

State retirees with Medicare would see a 1 percent drop in the monthly premium to $226, while those with spouses would get hit with a 21 percent increase.

Added to the complexity is that some small local governments have joined the insurance plan to cover their active workers. In addition, any government employee who retires in Nevada can join the state plan, even if covered by another insurance policy while working.

Gagnier said he didn't mind seeing active state workers subsidize retired state workers under the current system, but he doesn't like to see active workers' premiums continue to subsidize premiums for those who retired from local governments.

"Our folks are getting tired of taking care of everybody else," he said.

Gagnier said if the insurance plan is not split, active employees may have to pay 8 percent more for coverage of family members rather than the projected 4 percent, primarily to subsidize retired members.

Bibb, who objected to singling out retirees, suggested that dependents instead could be calculated as a separate group.

He noted that the proposed increases would hit harder at pensioners from local government. For example, an early retiree from local government with a spouse would see a 37 percent jump to a premium of $672 a month. And a Medicare retiree and spouse would face a 39 percent increase to $447 a month.

The idea of splitting off the elderly for insurance rating was considered years ago but discarded, Bibb said.

"We believe it was wisely rejected," he said.

Tied to this thorny issue is pay raises for state workers, which Gov. Kenny Guinn has made a top priority.