Among the policy reforms included in last year's state budget, was a move to self-insure state employee heath insurance……Governor Benson championed the move, and lawmakers counted on realizing some 20 million dollars in immediate savings…….Those savings have not materialized…..and are in fact now looking a lot more like increased costs.
When the state entered into its self insurance plan last fall official were confident it was the right move. Administrative services commissioner Don Hill said the state was looking at eight figure savings.
"It's probably around 24 million dollars in increased cash flow…..We also believe there's some savings that we can make by taking the risk ourselves --we're looking at around 15 to 20 million dollars.But again we don't know until we get the claims in."
Only part of that statement now appears true…..and not the part about savings…..Here's what Hill had to say yesterday.
"Medical costs statewide are hard to control no matter what you do whether you go self insurance or fully insured program. I do not believe the state will be able to save substantial amounts of money no matter what you do in this area."
Hill recently told state agencies heads to set aside another 5 million dollars to shore up a statutorily mandated reserve fund.……..And that was just the half of it……..The state is also projecting a 29 percent spike in employee health costs beginning next month. That's about twice the growth rate of health insurance costs in general. Earlier this week, Governor Benson struggled to give reporters an explanation.
"The problem is we've only had real claims experience since the fall. So we're dealing with a very short number of months, and it's hard to see if there are trends associated with this, or whether we've just had….In the coverage of insurance we've had months that are high and then months that are low and months that are medium and so forth and so on and we are hopeful to get more information as time goes on be we are hopeful to get more information as time goes on. But again we run into the time constraint for next year's budget."
Such words are little consolation to leaders of the state employees association.
"It's not a question of they misjudged. They just blatantly excluded some of the factors to make sure the numbers look right. They promised all these savings to self-insurance with excluding the start-up costs and everything else."
That's Randy Hunneyman. He's a member of the SEA's contract negotiating team. He says the state has not met several of the legal requirements of a self-insurance program. These include hiring an actuary to determine appropriate reserve levels…..and also that the state establish that reserve in a reasonable period of time……But Hunneyman says the bottom line for employees is getting a grip on costs before the union goes back to the negotiating table.
"They're putting forward their premium numbers and saying this is their cost of doing business with no actuary to validate the numbers, they can't tell you where it's coming from, and they can't show us the actual utilization and that's what the governor is going to use to say why state employees should pay part of their health insurance."
Health insurance has long been a sticking point in stalled contract negotiation between the union and the Benson Administration……And will likely continue to be one should negotiations resume. In the meantime, administrative services commissioner Don Hill says the state is planning to hire an actuary to analyze reserve levels……
