State employees face higher health insurance costs

Monday, Sept. 17, 2001 | 10:17 a.m.

CARSON CITY -- Many state workers are blaming the state Legislature for financial problems of their health insurance system that are causing their costs to rise, but state officials say the employees are pointing the finger at the wrong people.

The state Public Employees Benefits Program Board on Friday raised the monthly premiums by 7.2 percent and reduced some dental and prescription drug benefits, starting in January, to keep the system solvent.

That's a far cry from the 22 percent rate increase that was initially discussed. But that still didn't sit well with some of the employees who testified before the board.

"I can't afford the increase," Marie Yates, who works for the state Welfare Division in Las Vegas, told the board.

Scott McKenzie, executive director of the 4,400 member State of Nevada Employees Association, said in his 23 years in the labor movement, "I have never seen people so upset" about the proposed increases.

Financial problems have required changes in the premiums and benefits, state officials said.

David Smith, chairman of the benefits board, told a meeting telecast to Las Vegas that the state "is not in the driver's seat" over what is charged by prescription drug companies and medical providers.

"Vendor increases come every year. We can't tell them we're not going to pay it," Smith said. "Almost every state and county is facing a rise in medical costs."

The staff made changes that will mean less than an 8 percent increase, as opposed to the initial estimate of 22 percent, he said. The combination of increased premiums and reduced benefits will mean the $100 million-a-year program will continue to have an $18 million reserve, he said.

Under the proposed rate increase, state workers, whose premiums are paid by the government, will have to chip in about $134 a month to cover a spouse, up from $125. For a spouse and children, the premium will rise to an estimated $253 a month, from $237.

State retirees will pay about $450 a month in premiums for them and a spouse, up from $418. A retiree with a spouse and Medicare will pay a little less than $180 a month for coverage, up from $167.

The board made changes in the prescription drug program, one of the fastest rising items in the policy. The co-payment for a generic drug will drop from $9 to $5. But the co-payment of a brand name drug will rise from $18 to $22.

For some of the more expensive drugs, such as Claritin, Claritin D, Celebrex, Vioxx, Zoloff and Prozac Weekly, the co-payment will be $40.

The board decided that the $100 lifetime deductible for dental work will be be changed to $50-a-year deductible. And the state will base its payments to the dentists on 80 percent of their charges instead of 90 percent. That means workers will have to pick up more of the cost.

But preventive work such as teeth cleaning would still be free.

Executive Director P. Forrest "Woody" Thorne said the staff intends to be more aggressive in negotiating rates in the future, in auditing providers who present large claims and monitoring the prescription drug plan.

As part of the cutbacks starting in January, the board decided to end its contracts with Vons, Safeway and RiteAid. That move will save the system $400,000 over the year, he said.

It also will mean fewer outlets will have more business and can give the state bigger discounts, he said.

Legislators have been concerned about financial problems in the health insurance fund since shortly after the close of the 2001 Legislature, when Senate Majority Leader Bill Raggio, R-Reno, and Assemblyman Morse Arberry, D-Las Vegas, wrote a letter to Thorne, saying they were concerned about the financial stability of the system, given its "volatile history."

They ordered Thorne to submit periodic reports to the Legislative Interim Finance Committee on the financial health. Two years ago the Legislature had to pump $26 million into the system to keep it afloat.