State employees’ health premiums facing increases

Wednesday, June 19, 2002 | 10:40 a.m.

CARSON CITY -- The health insurance policy that covers state employees, their dependents and retirees is ailing financially and an increase in premiums will be needed in January.

P. Forrest "Woody" Thorne, executive director of the Public Employees Benefit Program, said Tuesday that the net loss for the system in the last nine months was $9.1 million.

Part of the reason, he said, is a rising number of big claims -- more than $25,000 for medical bills -- for the more than 50,000 members. He told the Legislative Interim Finance Committee that $5 million has been spent on these cases alone.

Senate Majority Leader Bill Raggio, R-Reno, said it sounds like the system is "going to crash." Thorne agreed, saying the system was in "a survival mode" until the end of the year.

The state covers the full cost for its employees, who pay the premiums for their dependents. Retirees of the state receive a subsidy to cover their costs. Starting July 1, the state will contribute $384 a month per employee.

There was $18 million in reserve at the beginning of the fiscal year but Thorne said that will dip to about $3 million by next January.

Raggio asked if the insurance system was considering cutbacks in the benefits. Thorne said there will be public meetings in the next month to receive comments on how the insurance policy might be changed. He said its benefits already were "sparse" and he favored increased premiums.

Thorne said there would have to be a "significant rate increase" in January but he wants to spread that so there would be a second raise in July.

"We want to step this so we would not hammer the participants all at once," he said.

The system raised its rates by 7.2 percent last January for dependents and retirees.

The insurance system is changing the company that processes and pays the bills in July to Benefit Planner of Texas. It will succeed UICI.