State sees insurance costs jump

Friday, Oct. 4, 2002 | 10:41 a.m.

CARSON CITY -- Costs jumped 34 percent in the state employees health insurance plan last fiscal year, a financial consultant said Thursday.

John Coyle of the Segal Co. told the board of directors of the state plan that the system has been falling apart at the seams. The national average showed a 16 percent rise in health care costs.

There has been a 30 percent trend upward in the last two fiscal years, Coyle said.

Part of the problem, he said, was that the company that once paid the bills for the state system lost its contract as of July 1. The company stopped paying bills June 14, leaving its unprocessed claims for its successor, Benefit Planners.

Leslie Johnstone, chief financial officer for the Public Employees Benefits Program, reported the system lost $16.6 million in the last fiscal year. She said that was $2 million less than originally estimated.

Claims have been running ahead of premiums and interest revenues for most of the past year. Revenues rose only 6 percent while costs jumped 34 percent, she said.

Johnstone said the problem was compounded because the interest income on investments fell 55 percent due in part to the sluggish economy.

Claims are continuing to climb and the system is averaging a record $648,000 a day. Johnstone said the system will be receiving higher premiums from state agencies that will help cover costs for the rest of this fiscal year.

The state pays the full cost of the premium for its workers, who must pick up the premiums for dependents.