OLYMPIA, Wash. –
Washington's state-employee health insurance system is in crisis. It
faces a significant cash shortfall over the next year-and-a-half. In
fact, if it was a privately-run insurance plan, state regulators likely
would have taken it over by now. Correspondent Austin Jenkins reports
on the debate in Olympia over how to shore-up the system.
The letter from Washington's Insurance Commissioner to Governor Chris Gregoire in December was stark. He wrote: “(If Washington's uniform medical and dental plans) were a domestic insurer, the program would be subject to receivership proceedings.” In other words, the public employee health system is in a – quote - “financially-hazardous” condition.
Steve Hill: “We're looking at a basically 200 to 220 million dollar shortfall in this biennium.”
Steve Hill runs Washington's Health Care Authority. He says state employees are the biggest cost driver. They're using a lot of healthcare these days.
Steve Hill: “And I think what's happening is state employees are becoming concerned about their jobs. With this insecurity they're going out and getting that treatments they need.”
And that's driving up claims. Another problem: medical inflation. Last year, the Health Care Authority projected inflation of 7-point-5 percent. But the legislature only kicked-in 3-percent more money. To close the remaining gap, state employees were required to pay higher co-pays and deductibles this year.
A disclosure here: While no state tax dollars support public radio's Olympia bureau, our health benefits are purchased through the University of Washington, which is part of the state system.
Despite charging more for co-pays and deductibles, the cost to run the state plan continues to outpace projections. And that's led to finger pointing. Greg Devereux heads the largest state employee union. He blames the legislature for creating the cash crisis by dialing back the state's contribution in 2008.
Greg Devereux: “There's no question it was a cash grab. There was 215-million in reserves and they simply lowered the funding rate so that reserves would be eaten up in the next year, which it was.”
Democratic lawmakers defend their move. They say they overpaid into the system and were simply adjusting for that fact. Washington Governor Chris Gregoire has a plan to close the 200-million-dollar-plus gap this year. But half the money would come from a rainy day fund and another cash account. That alarms some of Gregoire's fellow Democrats in the legislature. State Representative Pat Sullivan is a key member of the House Budget Committee.
Pat Sullivan: “I don't want to be in a position where we're acting so fiscally irresponsible that we drain the reserves and actually require the PEBB board to go out for a loan, perhaps, in order to ensure that they're not insolvent. That's irresponsible and that's what we can't do.”
State Senator Rodney Tom is the number two budget writer in the Senate. He points out a private health insurance company would be prohibited from draining its cash reserves to the level the governor is proposing.
Rodney Tom: “I think that government should be on an equal plain with everybody else and we should be playing by the same rules, not special rules.”
So what's the solution? In the short-term, House Democrats are working on a fix that would take less from reserves. But that might mean taxpayers would be on the hook for more of the cost to shore-up the system. In the long-term, state employees may have to pay a greater share of their monthly healthcare premiums. Currently, Washington state picks up a generous 88-percent of healthcare costs while public employees cover the remaining 12-percent. The governor recommitted to that level of benefit this summer when she approved new collective bargaining agreements. Gregoire's budget chief, Victor Moore, defended that decision in an interview this past December.
Victor Moore: “So they came to the table with a contract offer said ‘no raises.' If I had just said I'm not going to bargain with you, I'm not going to have a contract, then I think they file an unfair labor practice and I'm not bargaining in good faith.”
Minority Republicans shake their heads that Gregoire could have driven a harder bargain. They've called on her to declare a fiscal emergency and reopen those contracts. Senator Joe Zarelli is the ranking Republican on the Senate budget committee. He argues having employees pay higher monthly premiums would actually be fairer to them.
Joe Zarelli: “I think there's a way that better serves the employee too to raise-up the employee contribution rate and reduce some of the other cost sharing costs.”
Like deductibles and co-pays. Union president Greg Devereux says cost-sharing is always on the table. But he clearly thinks the state – not his members – should shoulder the rising cost of healthcare.
Greg Devereux: “Our members have taken so many hits over the years trading off wages for healthcare they don't want to trade healthcare again now.”
There's no indication the governor will reopen the contracts she signed last year. But she will be back at the table with state employees this spring to negotiate their next two-year contracts. A long-term solution though will require the state getting a handle on a problem the country is grappling with – that's runaway healthcare costs. I'm Austin Jenkins in Olympia.
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Copyright 2010 Northwest News Network
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