The Public Employee Benefits Program board voted Monday to cut spending for the coming fiscal year by $25.7 million.
That is actually $1.2 million
more than the 6 percent target the program was given by Gov. Steve Sisolak’s
Employee and retiree groups
actually praised the staff for coming up with ways to reduce the budget that do
as little damage as possible to the program and its thousands of member state
workers, retirees and their families.
At Executive Officer Laura
Rich’s recommendation, they took the reductions from Catastrophic and HRA
Required Reserves along with the Medicare Exchange HRA rollover caps.
The money doesn’t, however,
automatically revert to the state General Fund. That requires action by
Legislature and governor.
They voted to reduce the
Catastrophic Reserves from a 60-day operating reserve to a 50-day reserve. That
saves a projected $7 million.
In addition, the board cut
HRA Required Reserve funding from 100 percent to 80 percent, saving another
$6.9 million in the fiscal year beginning July 1.
“The reality is it doesn’t
need to be funded 100 percent,” she said. “We’re not going to have 100 percent
of these funds used.”
The Medicare Exchange HRA
money, she said, can be capped at a maximum $8,000 per person because most
Medicare Exchange members will not be affected since they don’t accrue large
balances. She pointed out that there are participants with balances of more
than $20,000 who have never used their HRA because the money can only be spent
on qualified medical expenses and many people simply don’t have medical
She said that means PEBP can
sweep amounts over $8,000 from those accounts without causing the participants
any financial pain.
The decision saves a
projected $5.4 million.
On top of that, Rich told the
board the decisions they made at their March 31 meeting will save an additional
$6.4 million next year.
The board renegotiated the
contract with its pharmaceutical benefits manager, convincing ESI to reduce
costs by $4.5 million.
Finally, Rich and her staff
won an estimated $1.9 million worth of savings from the SaveOn program that
provides co-pay assistance on expensive drugs. That co-pay assistance —
basically paid by the drug manufacturers — was cutting off at $3,900 a year,
the maximum out of pocket for employees. That left the state to pick up
everything over that amount. Now, she said, the co-pay assistance continues
through the entire year even if the costs are far higher than $3,900 in a year.
The board rejected other
options including a premium surcharge of up to $15 for all workers, adding a
deductible to the HMO benefit plan and reducing the $25,000 life insurance
policy the state provides all workers.
Kevin Ranft representing
AFSCME-covered employees, said that union supports the recommendations by
staff. He was joined by Priscilla Maloney who represents that union’s retirees
among other officials.
But Ranft said in the future,
state employees shouldn’t be the “fallback for every state budget crisis.”
“Every time there’s no
revenue coming in, state employees get hit,” he said.
The 6 percent hit to PEBP’s
budget is actually significantly smaller than what other state agencies are
required to cut. First, PEBP isn’t required to cut the 4 percent other agencies
have to find in the remaining two months of this year.
In addition, other agencies
were told to present options for the coming fiscal year at not only 6 percent
but also 10 percent and 14 percent. PEBP was only required to find 6 percent