Insurance plan looks for help

Wednesday, July 3, 2002 | 9:50 a.m.

CARSON CITY -- The health insurance plan for state workers, which is sinking deeper into the red, may try to tap into a legislative emergency fund rather than raise premiums for employees or cut benefits.

The board of directors of the 31,000 member Public Employees Benefits Program Tuesday asked for a legal opinion on whether it could approach the Interim Finance Committee for money to handle a growing deficit.

Leslie Johnstone, accounting officer for the board, said the system's reserves will fall to $2.8 million by Jan. 1, when it should have more than $22 million to cover the medical services that had already been provided but had not been billed.

Forrest "Woody" Thorne, executive director of the board, said the staff is preparing a list of potential cuts in benefits and a raise in premiums that should be considered at a board meeting later this month. He did not give specifics.

But state workers are talking about losing their coverage for vision and dental and still having to pay higher premiums.

The system is falling deeper into the hole because the number of claims is rising faster than expected. In May the system paid out $12.6 million when it had forecast its expenses to be only $10 million.

Board member David Smith said the health insurance program was underfunded in the last budget presented by Gov. Kenny Guinn. He said the state budget office cut appropriation by 4 percent while medical costs were rising.

Smith said there was an understanding the system could dip into the state's "rainy day" fund if it got into trouble. He suggested the board send a letter to Guinn and the Finance Committee to help stem the growing financial troubles.

He gained support from Jacque Ewing-Taylor, another board member, who said she was "uncomfortable" about asking employees to pay higher premiums and receive fewer benefits without first looking at the emergency fund, which has $4.2 million remaining. But board member Bill Anderson, who works for the state Budget Division, said every government agency is facing the same problems.

"Education argues it is underfunded," as does human resources, Anderson said. "We have to be realistic."

The state pays the full premium for its workers, but employees pick up the costs for their dependents. The state pays partial premiums for retirees, who also pay for their dependents.

The 2001 Legislature, following the lead of the Guinn budget, allocated $357 per month for each employee last fiscal year, down 3.1 percent from the prior year. The allocation for this fiscal year, which started Monday, goes up 7.6 percent to $384 per employee per month.

Jim Richardson, representing the Nevada Faculty Alliance at the University and Community College System of Nevada, backed the decision to go to the Interim Finance Committee.

"It makes all kinds of sense even if we are turned down," he said.

Richardson said it will help educate the legislators of the problems facing the system. He recalled that four years ago the health insurance system was near bankruptcy and the Legislature had to appropriate $26 million to bail it out.