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Rising health-benefit costs eat away state employees’ pay increases

Nevada Appeal Editorial Board

It must seem like a cruel joke for Nevada state employees.

This summer, they finally began seeing a significant increase in pay only to find out a month later the amount they pay for health benefits may continue to rise.

At least active workers are getting a pay raise. For retirees, the health-benefits premiums just keep going up without any compensating increase in their retirement checks.

The state employees’ benefit plan has been a recurring nightmare.

Four years ago, L&H Administrators collapsed and left thousands of unpaid claims. The Legislature poured $26 million into the system just to keep it solvent.

Since then, however, the premiums paid by workers and retirees have climbed at a dizzying pace in order to keep up with rising costs in health care. The fund remains solvent, but it is being balanced on the backs of the people it is supposed to protect.

No wonder some groups, like the Highway Patrol Association, want out of the system. Its representatives told lawmakers they could get better benefits for a lower cost.

But allowing some groups to pull out put the state system in jeopardy, because it would leave retirees’ benefits to be paid while decreasing the amount of money coming into the system. Lawmakers already had closed one loophole, which had allowed retirees to claim benefits for all their years in government work – not just state government work.

Gov. Kenny Guinn noted last week a desire to increase the amount the state contributes. Now, the state pays $368 a month for each worker – enough to cover the entire health-benefit cost of a single employee – and $202 for each retiree. With 50,000 people in the system, the stakes are high – for both workers and taxpayers.

Guinn’s concern is justified, but raising the state’s contribution is a short-term solution. In the world of health-care insurance, cutting costs is the only long-term answer.

We hope the Public Employees Benefits Board, meeting today in Las Vegas to reassess the request for a 22.4 percent increase in premiums, takes a sharp pencil to the expense side of the ledger before it tries to balance the fund on the revenue side