Saturday, Nov. 6, 2010 | 2 a.m.
Bryan Spangelo knows a thing or two about figuring out things. After all, he has taught biochemistry at UNLV for 16 years and is a senior professor.
But even he is baffled — actually, outraged — by all-but-certain changes for him and other faculty, administrators and staff at UNLV who have health insurance.
Changes in benefits for state workers threaten to upend his budget and his family, Spangelo said.
His teenage son had abdominal surgery that cost $20,000 last summer. It cost him about $3,500 out of pocket. If his son had had the surgery next year, when the changes are in effect, Spangelo would have had to pay nearly $12,000.
“It’s out of the ballpark,” Spangelo, 55, said.
Spangelo and other UNLV employees are not alone. Almost all the state’s 25,000 workers — health and human services employees, prison guards, Department of Motor Vehicles clerks — are part of the same benefits program, which is in deep trouble.
The Public Employees’ Benefits Program, the state’s self-funded insurance plan, needs $611 million for the 2012-13 budget to maintain its level of services, but officials say the state can only afford to kick in what it did this past year, $500 million.
So program administrators are scrambling to cut $111 million — 18 percent — from the medical plan, even before factoring in rising annual medical costs that might reach 12 percent. Combined, inflation and the deficit means that what $1 buys in medical coverage this year will buy only 70 cents next year.
Meeting over the summer, the program’s board of directors found one way to save money: increase the deductible paid by the insured before the insurance kicks in. The board also eliminated most dental coverage.
The board is scheduled to meet Dec. 2 to make the changes final in July.
“As far as I’m concerned these changes are already in effect,” said program executive Jim Wells, chief architect of the changes.
“The state has a large hole,” he said of the looming $3 billion budget deficit. “This is our portion of the state’s overall cut. It’s not being done in a vacuum.”
Wells acknowledges that the changes may hurt the retention of professors, but he says their fears are overblown. Other changes, such as new health savings accounts that use pretax dollars, would ease some of the effect of the high deductibles, he said.
The American Federation of State, County and Municipal Employees union is angry.
Vishnu Subramaniam, a spokesman for Local 4041, said in an e-mail that the state’s new insurance coverage “would be an insurance plan that no insurance agent would be able to sell. It guts the benefits available to employees and drastically increases costs to them and their families.”
A special panel appointed by university system Chancellor Daniel Klaich is set to issue a report on the changes this month.
“We’re talking about the possibility that a family, kids basically, won’t be able to afford basic health care,” said Gerry Bomotti, UNLV’s senior vice president of finance and business, who heads the 12-member panel.
The immediate fear: University employees will leave the system, driving up costs for those who remain enrolled. Another fear: The employees who dropped out will have to be taken back under new federal rules in 2014, wiping out any short-term savings.
Are there any solutions? Not many, Bomotti said, but the Nevada System of Higher Education is considering an emergency supplemental insurance plan that could be funded without the state’s assistance.
The 2009 Legislature avoided such drastic cuts to the state’s employee insurance plan, but not this year.
The board proposed “fairly radical” changes, Bomotti said.
Insurance won’t cover routine medication, procedures or dental care, but will become a “catastrophic health care program” that only covers care costing many thousands of dollars.
For example, Bomotti said, the current $1,600 a year deductible for a family would increase to $4,000. The maximum that a family might pay would rise from $7,400 to $11,800. Moreover, expensive prescription drugs, such as Lipitor that lowers cholesterol, would become part of the high deductibles. Out-of-pocket expenses would rise because most visits to the pharmacy won’t be covered until the deductible is met.
For some healthy families, substantial insurance coverage may not kick in until the last month of the coverage year.
For UNLV, there are few, if any alternatives. Only 1.8 percent of the employees do not participate in the program.
Bomotti said he is braced for many more to leave the insurance plan.
Premiums range from $44 a month for an individual to $195 a month for a family and are likely to rise sharply next year. The board hasn’t set the new premiums yet.
Don Heilman is a senior benefits consultant at Gallagher Benefits Services in Greenwood Village, Colo. The university system has hired Gallagher to study the state health care plan and compare it with those of other universities.
Nevada is unusual in bunching together a variety of state employees in one program, from prison guards to professors. All states struggling through the recession are facing difficulties funding pensions and benefits, Heilman said.
But university programs face special challenges, because it is more likely a prison guard will be hired locally and a professor is recruited from elsewhere, he said.
For that reason, most universities have their own, relatively favorable, benefit plans.
Heilman said cutbacks in other states are “not as dramatic” as in Nevada and changes are far more gradual.
Spangelo, who teaches chemistry required for doctors and other health professionals, is sure he would never have come to UNLV if these benefits changes had been in place.
At $113,000 a year, Spangelo makes a good living (his wife is also a chemistry professor). But the steep rise in health care costs next year means he has to rethink how to pay for college for his son, especially if his son needs other medical procedures.
Colleagues feel the same way and a growing number are circulating their resumes.
“If UNLV and the state of Nevada can’t offer reasonable benefit packages, they’re not going to be able to recruit faculty or retain the ones that we have,” Spangelo said.
With the furloughs, staff cuts and salary freezes, he said, “this is one more thing that gets people out the door.”