Lawmakers knew they probably weren’t giving state employees enough to keep up with rising health insurance costs this year, but they thought they at least were giving them something.
As the numbers are finalized, it turns out the 3 percent cost increase covered in the budget is more like zero – a flat line in funding from one budget to the next.
State workers already were expecting higher co-payments and deductibles over the next two years, and the latest twist only steps up the growth.
State administrators say the increase is a normal part of running insurance plans.
The Public Employees Benefits Board always carries a reserve of cash to pay for unexpected increases in charges from the people using its insurance plans.
The reserve was drawn down compared with the most recent two-year budget and needs a $20 million infusion in the next budget, said Marilyn Wilfong, chief financial officer for the state Health Care Authority. The agency oversees public employee health plans, which cover 49,000 people in Thurston County and 30,500 in Pierce County.
Some of the increase that the Legislature approved in April will be used up in replenishing the financial padding, in addition to covering charges by employees using their insurance.
“We just have to make sure that at the end of the day we can meet all those costs and still have a premium reserve,” Wilfong said.
As the state’s contribution target decreased, so did the money coming in from other entities that use the benefits board, such as county governments.
Those and other factors wiped out most of the $22 per-worker, per-month increase offered by legislators for 2010. The agency had requested $774, a 7 percent increase over the current rate of $723.
Still, the $745 per employee approved is an increase in a recession that cut about $4.5 billion in state spending, Sen. Cheryl Pflug, R-Maple Valley, said.
“It’s not what the public is experiencing. It’s not what the providers are experiencing; they’re taking real cuts,” she said.
Pflug had proposed reducing the increase in state employee subsidies to $17 per month and using the savings to preserve the Basic Health Plan for the working poor. Instead, the final budget trimmed the budget of the 100,000-person plan by 43 percent.
The Health Care Authority announced this week that it would significantly increase the costs charged to people on the plan to help make up the difference. The higher costs also were expected to drive thousands of people from coverage.
“Those are real cuts. Where as this – it may not be the suggested amount, but it’s not a reduction in funding,” Pflug said.
The state budget is expected to cause widespread layoffs in state agencies.
The largest state workers union, the Washington Federation of State Employees, said that the $20 million is just part of the hit employees are taking.
“It is of concern. The (benefits board) is considering a lot of things to try and mitigate that. Nothing is finalized that we know of,” spokesman Tim Welch said.
He noted that the board isn’t expected to settle on final plan designs, including premium and co-pay costs, until next month.
Adam Wilson: 360-753-1688