Benefits budget closed
April 17, 2003
A subcommittee of the Senate Finance and Assembly Ways and Means committees was told Wednesday the unfunded debt of the Public Employees Benefit Program will be just under $21 million by the end of this fiscal year.
But fiscal analysts and PEBP Director Woody Thorne advised lawmakers the benefits plan approved last month should begin building up the reserve necessary to cover that debt with the start of the new year.
The debt consists of the “incurred but not reported” liability for claims by employees using health services under the program.
Sen. Bob Coffin, D-Las Vegas, said he was concerned the state needs to put more money into the program because its current situation is similar to that of two years ago.
“I need to say that, two years ago, I suggested the reserve would not be enough,” said Coffin, an insurance broker. “We underfunded it artificially last time. I don’t want to do that again.”
Thorne told him the budget is based on projections that medical claims will grow at 28 percent — far higher than the estimated 18 percent for the Western region. He said dental and other parts of the plan are also projected highly because that has been the Nevada plan’s experience.
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But he said he is confident the plan will make it through the biennium and begin to rebuild its reserves.
And he said changes the benefits board made in the plan — including increasing the deductible and co-pay rates for different services — should begin to slow down the utilization by employees.
“That’s what’s been driving our plan,” he said.
The subcommittee voted to accept the recommended budget numbers for the plan, setting the state’s monthly contribution rate for employees at $495.68 next year and $558.07 in fiscal 2005.
Those are the amounts needed to fund the benefits program hammered out by the board last month. That program, for the first time, will require active state employees to pay part of their own premium — $14.36 a month.
Lawmakers were also advised that if any of the legislation to commingle active and retired workers into one pool is passed, the budget may have to be reopened unless that legislation contains the estimated $4.5 million a year commingling would cost.
Those pieces of legislation were proposed because of growing complaints that high costs for retirees are driving some of them out of the plan, leaving them without coverage.