State budget to empty health plan reserves

Georgia’s budget plan for the upcoming fiscal year, if approved, would deplete all reserve funds from the health insurance plan that covers 690,000 teachers, state employees, dependents and retirees.

Gov. Sonny Perdue’s austere budget —- prompted by a more than $2 billion shortfall and sliding revenues —- would lower contributions that state agencies and boards of education pay for health benefits by $113.7 million.

That would eliminate the reserve for the State Health Benefit Plan by June 2010, says the Department of Community Health. The situation “is a reflection of the fiscal challenges the state is facing now,” Carie Summers, Community Health’s chief financial officer, said Monday.

There’s no statutory requirement to maintain a certain level of reserves in the state health plan. The projected reserve for this June, $154 million, would be 5.8 percent of total spending of the state plan. A survey of other government health plans, Summers said, showed states had at least 5 percent of expenditures in reserve.

Already, the reserve fund this year has been reduced from a high of $472 million to ease the overall budget stress.

Community Health also projected that under the fiscal 2010 budget, state employees and teachers staying in the same health plan would face a monthly premium increase of $16 to $25 for single coverage, and $50 to $74 for family coverage. The state will set final rates later this year. State employees are not expected to get a cost-of-living raise next year.

Perdue spokesman Bert Brantley said the state’s depleting the reserve and charging higher premiums was needed to avert “massive furloughs and perhaps people losing their jobs.”

“Every dollar that is used from a reserve fund is a dollar less that we have to cut,” he said.