Health costs: No relief in sight

STATE WORKERS: Fees rose at start of year; outlook is worse in 2011 due to budget woes

January 4, 2010 

  • BY THE NUMBERS

    State employees’ health care costs went up Jan. 1, part of the Legislature’s decision to require higher deductibles, higher co-pays and more out-of-pocket payments by patients. At the same time, taxpayers still are picking up 88 percent of insurance premium costs, which employee unions demanded in contract negotiations last year.

    The governor’s Office of Financial Management says most employees’ out-of-pocket medical costs will be up by $550 to $1,250 a year, depending on their level of use. For details about the changes, which vary by health plan, go to www.pebb.hca.wa.gov/changes2010.html.

    Uniform Medical Plan: The State Health Care Authority says the premium increase for individual coverage in the popular Uniform Medical Plan is going up by $180 a year. Healthy users of that plan face no increase in out-of-pocket expenses, because of low use. But workers of average health can expect about $77 in new fees – including higher co-pays for office visits and a $50-per-person increase in deductibles. Those with higher medical needs would see the biggest hit, including $550 in out-of-pocket costs, on average. But for those with extremely high medical needs, out-of-pocket maximums go up $500 to $2,000 per year for an individual and up $1,000 per family to $4,000.

    Group Health Classic: In Group Health Classic, premiums drop about $432 a year for an individual and $1,188 for a full family, outweighing any increase in out-of-pocket costs except for those with high medical needs. But the cap on out-of-pocket costs skyrockets from $750 to $2,000 per person and from $1,500 to $6,000 per family.

    Despite the premium changes, Uniform remains the cheapest and again was the most popular plan for employees in the recent enrollment period. Nearly 55 percent of the 336,000 covered workers, dependents and retirees already were in Uniform during 2009, and that share is expected to rise by a few percentage points, according to the Health Care Authority.

State employees are in for another health care rate hit in 2011, on top of out-of-pocket and premium increases for 2010 that took effect three days ago.

The state Health Care Authority says the worker share of monthly premiums increased Friday by about 50 percent – up $180 a year, on average – for individual coverage in the Uniform Medical Plan, which more than half of eligible workers prefer. Deductibles and co-pays also went up for medicines and doctor visits.

Premiums fell for Group Health participants, who still will pay higher monthly premiums than those in Uniform. Those in Group Health and other plans also face much higher out-of-pocket costs if they are heavy users of health care.

The outlook is worse for 2011. The Office of Financial Management estimates that most members will see out-of-pocket expenses jump between $550 and $1,250 per year in 2010, depending on use, and deductibles that now average $250 per person are likely to double in 2011 – with Uniform Medical participants facing a worst-case scenario of $5,000 in out-of-pocket costs.

That prospect is setting off a fresh debate in the Legislature, which meets Jan. 11 for a 60-day session with a $2.6 billion budget shortfall to solve, including a new shortfall in the worker health care accounts.

“There’s no question that preventing further takeaways in health care is our top priority,” said Greg Devereux, the executive director of the Washington Federation of State Employees, which represents 40,000 state workers and is ready for a fight. “We have other priorities. There are facility closings, employee layoffs, child-welfare privatization … . We’re getting decimated in many different areas.”

The issue is important for Thurston County, which has more than 21,000 people employed in general-government agencies and thousands more spouses and dependents covered by the state plans.

The state Health Care Authority runs the state worker health program, which lets employees choose between the state-run Uniform Medical and several private insurance plans. But costs for those plans are mushrooming as workers’ use of care has shot up in the past year, creating a forecasted $220 million shortfall for the plan by June 2011.

Gov. Chris Gregoire’s supplemental budget request includes about $140 million in extra taxpayer money to help cover part of that shortfall. But Gregoire also assumes that workers will take on more costs in 2011, and she is not proposing to use any portion of likely tax increases to further relieve worker burdens.

Devereux wants a share of tax increases to help cover the shortfall. Devereux and the Health Care Authority say use soared in 2009 because employees feared layoffs, and some rushed to get care by the year’s end to avoid the higher rates. Others made sure they got care while they still had jobs, a situation that is less likely to change with Gregoire’s proposal to cut an additional 1,500 jobs.

Whatever the actual costs could be, the federation and allies face an uphill climb if they want to “level off” or decrease the workers’ share, as one federation spokesman described the goal. Even labor-friendly Democrats are skeptical.

“I think additional funding is unlikely,” Senate Majority Leader Lisa Brown, D-Spokane, said last week. “First of all, there will probably need to be more, further sacrifices on the part of state employees – like others – in some form. I think that is inevitable given the size of the budget hole we are facing.”

Brown said it is too early to say how workers might have to make up the difference, or by how much.

In the House, budget-writing Rep. Kelli Linville, D-Bellingham, said lawmakers hadn’t planned to spend more on employee health care this year.

Some Republicans, led by Sen. Joseph Zarelli, favor significantly larger premium payments by workers for their insurance – up from the 12 percent of premiums that workers bargained for in about two dozen labor contracts that Gregoire signed in the spring and summer.

Zarelli criticized the governor for not letting previous contracts lapse in June 2009. The terms of those agreements would have remained in effect for just one year – through June 2010. Zarelli contends that this would have given the state more leeway to cut employee pay and benefits this year.

Zarelli also criticized Gregoire for including step-pay increases of up to 5 percent for about 21,000 workers, or 20 percent of the entire general-government and college work force.

Gregoire’s budget director, Victor Moore, said in a recent interview that critics are using hindsight to judge Gregoire’s actions on contracts signed when the revenue outlook wasn’t as bad. He said lawmakers had just balanced the state budget with spending cuts and had more than a half-billion dollars set aside to deal with future problems.

At the time, the 88-12 split of health costs still seemed reasonable, especially considering workers faced higher out-of-pocket costs and were not getting cost-of-living pay increases, Moore said. He also said the step-pay raises were something that has been assumed for years, even before collective bargaining began in 2004.

Despite Brown’s pessimism about helping workers, the senator wrote on her blog recently that state workers should not be turned into scapegoats. She said that eliminating all state contributions to worker health care costs still would leave lawmakers with a $1.65 billion shortfall.

“The Legislature isn’t going to be doing this, of course. But the example illustrates how pointing the finger at state employees doesn’t provide a realistic solution to the challenge we face,” Brown wrote. She also said lawmakers already have cut $800 million in expected compensation for workers, reduced health contributions by $200 million and lopped 3,200 jobs, and could cut 1,500 more jobs under the governor’s latest budget plan.

Spokesmen for the Health Care Authority, which administers the health care plans for about 336,000 state employees, dependents and retirees, say the OFM’s estimated cost increases for 2011 seem high and are premature. But Tim Smolen, a budget manager at the authority, said higher costs are likely for workers.

Overall, Smolen said, changes in the rates employees pay in 2010 will help the agency save about $60 million over two years – one piece of the state’s effort to cover the funding gap. Smolen said the higher deductibles, co-pays and other out-of-pocket charges for workers also help reduce overuse of health insurance by patients, which also lowers costs.

Some line workers in state agencies sound conflicted recently when asked about the state’s predicament, which could pit job cuts against health care cuts.

“I know that we have a really good health care plan for state employees,” said Scott Chapman, who works in the state Recreation and Conservation Office and was having lunch with his family at the Natural Resources Building. “I’m willing to pay a little more to keep my co-workers who might be losing jobs if we didn’t cut overall costs.”

Brad Shannon: 360-753-1688

bshannon@theolympian.com

www.theolympian.com/politicsblog

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