Health benefits divide Titus, Gibbons

Tuesday, Sept. 19, 2006 | 7:20 a.m.

CARSON CITY - The candidates for governor differ on a controversial plan to reduce or eliminate health insurance subsidies for future state workers when they retire, with Republican Rep. Jim Gibbons favoring the idea and Democratic state Sen. Dina Titus vowing to fight it.

Gibbons, R-Nev., says he endorses the proposal of Gov. Kenny Guinn to curtail future state workers' health coverage that was defeated in the 2005 Legislature - and that Guinn would like to see go before legislators again next year.

Whether the issue is reconsidered, however, will be up to the new governor. And if Senate Minority Leader Titus, D-Las Vegas, wins the Nov. 7 election, it is safe to assume that it will not be taken up again - at least not in the form suggested by Guinn.

Titus, who led opposition to the plan last year, argues that it would be a mistake to remove health coverage payments from future state workers.

With Nevada already fourth worst nationally in the number of uninsured people, Guinn's plan would worsen the problem, she said.

Gibbons, though, said he believes Guinn "was right when he attempted to convince the Legislature to change from a defined benefit plan to a defined contribution plan.

"If we don't, we will never be able to save the state from an enormous cost," Gibbons said in an interview on "Nevada Newsmakers" in Reno. "Right now they are projecting over the next several years a $5 billion shortfall.

"When state employees recognize that from a certain time forward those people hired by the state have to be in a defined contribution plan rather than a defined benefit plan that we are today, we will start to get a handle on how we will control the runaway costs of that program."

Under Guinn's 2005 proposal, state employees hired after July 2005 would have been ineligible for a state-funded health insurance subsidy when they retire.

The state now pays an average of $316 per month in premiums for retired employees.

In 2005, the Guinn administration estimated that its plan would save $250 million to $500 million over the next 30 years.

Guinn, who has asked that a similar bill be considered by the Legislature next year, said economic realities demand that the state subsidy be, if not eliminated, at least reduced for future state workers when they retire.

"You could do it like some companies that say when you retire you're getting $150 a month for you as an employee," the governor said. Retirees would be responsible for the cost of premiums above that figure, he said.

Such a reduction in future health benefits would not undermine the recruitment of state workers, Guinn contends.

"When I sat down and met with the teachers association, the (university) professors and their association and state employees, not one person (felt) they had 100 percent for the rest of their lives no matter what it cost," he said.

State employee groups will have to give up salary increases from the state's general fund to continue funding the growing cost of insurance premiums, Guinn said.

"There may be some other plans, but I'm just trying to get them (the Legislature) started," Guinn said. "It's very critical what you will have available for salaries and programs because the state is going to get bigger and people are living longer and the (medical) costs are on a steep climb."

The 2005 bill passed the Senate on a party-line vote, with Republicans supporting it and Democrats opposing the measure. It later died in the Democratic-controlled Assembly Ways and Means Committee.

Titus acknowledges that there is a problem with the funding of state retirees' health insurance but said she does not believe future state workers should be penalized to solve it. Setting up a health insurance savings account might be one possible solution, Titus said, adding that she wants to examine other options.

Any program that might leave more people without health insurance only exacerbates the state's existing problems with health treatment costs, she said.

Under current law, state workers who retired before 1994 have their health insurance paid in full by the state. Those who retired after 1994 receive a subsidy based on years of state service, a figure that rises to 100 percent of the cost after 15 years.

Last year, state employees and retired state workers opposed the Guinn plan. Business, including the Greater Las Vegas Chamber of Commerce, supported it, noting that only a small percentage of companies provide fully paid health benefits for retirees.