State workers’ insurance system is still in the red

Wednesday, Jan. 29, 2003 | 10:50 a.m.

CARSON CITY -- The 55,000-member state employees health insurance system is still bleeding red ink, despite getting $44 million in bailout funds from taxpayers since 1999. During a review of the proposed budget for the system Tuesday, Assemblyman Morse Arberry, D-Las Vegas, said the escalating cost "looks like we're on a runaway train."

Gov. Kenny Guinn has recommended that the present state appropriation go from $194.6 million to $213 million in 2004 and $245 million in 2005. The state now pays $465 a month to cover the full premium for a worker, who must pay the premiums for dependents. That figure would go to $495 next fiscal year, a 6.4 percent increase, and then to $588 the following year, a 12.6 percent jump.

Assembly Speaker Richard Perkins, D-Henderson, complained Guinn and other state officials "keep asking for more money" for the program.

"We don't have that kind of money," he said.

But Forrest "Woody" Thorne, executive director of the Public Employees Benefits Program, says its board of directors will meet in March to either reduce benefits or increase premiums to keep the program within its two-year budget.

Several legislators asked about putting the system into private hands. But Thorne said attempts to solicit bids to transfer the entire risk and program to a private preferred provider or an HMO statewide were unsuccessful.

Possible suitors were turned off by the system's past claims and demographics that show the members are getting older and require more health care, Thorne said.

He told the Senate Finance Committee and the Assembly Ways and Means Committee members that 90 percent of the claims cost is incurred by 10 percent of the members. And 2 percent of the members account for 54 percent of the costs, he said.

The system had an $8 million reserve June 30, 2002, but that will shrink to $3.9 million at the end of this fiscal year, even with $18 million pumped into the system.

The 1999 Legislature also had to make a $26 million infusion into the system to keep it from becoming insolvent.

Thorne said the $3.9 million reserve is only enough to pay for about seven days worth of claims. He said the proposed budget would build that up by $5.9 million a year to more than $15 million by the end of the biennium. That's 61 percent of the recommended $24.9 million reserve.

Thorne foresees medical costs rising 15 percent and drug costs jumping by 18 percent in the coming budget year.

Arberry asked Thorne what measures have been taken to control the costs. Thorne replied that his staff is now compiling a "laundry list" of what changes have to be made in the next fiscal year to keep the system within its budget.

The board of directors will meet in March to decide on benefits and rate the changes.

Sen. Bob Coffin, D-Las Vegas, pressed Thorne to get the proposed recommended changes earlier so the budget committees could see what, if any, added money is needed.