State workers’ insurance could be raised 22 percent

Wednesday, Aug. 8, 2001 | 10:37 a.m.

CARSON CITY -- The company that sets insurance premiums for the 50,000 members of the state employees health plan is proposing an increase of 22.4 percent.

The state Public Employees Benefits Board was scheduled to vote Tuesday on new rates for 2002 but when members heard the size of the proposed increase they delayed action until Aug. 29.

Board member Carla Henson said she was shocked.

"I almost fell out of my chair," she said.

David Smith, chairman of the board, said, "Half of us had heart attacks" when they viewed the option presented by its actuary, The Segal Co.

P. Forrest Thorne, executive director of the board, said a breakdown by Segal shows overall medical inflation rising 12 percent, with the cost of prescription drugs up 20 percent, dental care up 8 percent and vision care up 6 percent.

Thorne said prescription drugs are taking a bigger and bigger slice of the medical bills.

He said the program is going to look for ways to "soften" the 22 percent. And it wants further information on breakdowns on how much each group is costing the system.

Board member Garth Dull said after the meeting that he would never vote to raise rates by 22 percent. He said many retirees can't afford it.

For their health premiums, the state contributes $357 a month for each active employee and $202 for each retired employee.

Under the scenario of a 22 percent increase, a state worker who covered his wife and children would have to pay $560 a month out of his own check for this policy. A state retiree and a spouse would face a bill of $723 a month, over and above the $202 subsidy.

The report by Segal showed that for the first six months of this year, the system collected $36.5 million from active employees and paid $28.5 million in claims. But for state retirees, the system collected $7.7 million n premiums and paid out $8.8 million, $1 million more than it collected.

Martin Bibb, executive director of the Retired Public Employees of Nevada, said the system is paying out $1.14 for every $1 it collects from the retired employees. He said that's "not out of whack."

The claims of the active workers and the retirees are being blended together to reach the amount of money that is needed to keep the fund solvent.

Bibb called the 22 percent a "big, big number." Last year, rates for active employees rose 4.3 percent but the "retirees took an 11-12 percent hit," said Bibb.

He said he was encouraged that the board is asking for additional information to seek how to avoid a big hit.