State workers’ insurance in the red

Friday, May 3, 2002 | 9:56 a.m.

CARSON CITY -- The health insurance program that covers state workers, their dependents and retirees ran $2.5 million in the red during the first three months of the year.

But P. Forrest "Woody" Thorne, executive officer of the state Public Employees' Benefits Program, said the system may be able to squeeze by this year without increasing premiums to dependents or those on pensions.

The Segal Co., the financial consultant to the program, reported Thursday the state collected $38.4 million in premiums during the first three months but spent $40.9 million to cover medical expenses.

John Coyle of Segal told the board of directors of the program that the system should have $22.2 million in reserve to meet fluctuations and unexpected expenses. But it has only $11.2 million.

There has been speculation that there would have to be a mid-year rate increase to keep the system operating. But Thorne said the claims have leveled off some.

In April, the first month after the quarter, the state paid out about $500,000 more than it collected in premiums.

Thorne also noted that come July 1, the state will increase its present contribution from $357 a month to $384 a month to cover an employee. That extra money will help keep the system afloat.

The state pays the full premium for its workers, who must pay for coverage for dependents. And retirees of the state get a subsidy to help them pay their costs.

Thorne said the board of directors in July will be looking at some program changes, possibly including different deductibles or higher co-pays. But Coyle cautioned, "There is no quick fix to the deficit position."

Coyle said the reserves should be built up over a period of years to reach $22.2 million.

Coyle said 23 percent of the enrollees order a more expensive brand name prescription drug when there is a less costly generic brand available.

Board Chairman Terry Johnson said the state's medical malpractice crisis will mean doctors will have to charge higher rates to recover their costs, and that will affect the state's policy.

Coyle said the state government has an "aging workforce" that leads to more health problems.

A breakdown shows there was a 4.8 percent deficit, or $1 million in claims paid out, for the 20,130 active state workers in the self-funded plan in the first quarter. The Segal report said the 5,472 retirees rang up a deficit of $1.1 million, or 25 percent, in the first quarter.