Insurance premiums for state employees, retirees, teachers and school personnel could increase by as much as 67 percent next year because the state has a $250 million shortfall in its health benefits program.
If the state makes up the newly discovered shortfall only with premium increases, costs could rise by two-thirds for employees, teachers and state government retirees. That would mean an extra $100 to $200 or more per month for many of them.
House leaders learned last week of new calculations showing a $250 million hole in the program, which was already slated to cost almost $3 billion, House Speaker David Ralston told The Atlanta Journal-Constitution on Tuesday. The shortfall will occur in the upcoming fiscal year, which begins July 1.
“It was a surprise,” Ralston said of the report by state budget officials. “They laid out a scenario that is very troubling. That’s why this is an issue that we’ve had to focus on over the last couple of days.”
The State Health Benefit Plan insures 692,000 state workers, agency retirees and dependents and school system employees. The state is a self-insurer, meaning it provides money for the fund and pays the workers’ health insurance claims itself. Employees pay about 25 percent of the cost and the government, 75 percent.
Plan officials had warned of shortfalls last year after budget cuts had helped whittle down a surplus that hit about $472 million in 2008.
Bill Tomlinson, a retired former state budget director who pays about $260 a month in premiums, chuckled when he heard about the size of the potential increase.
“It’s so bad it’s funny,” he said. “I think it is atrocious because they have known they were going in the hole for a year. It’s another huge hit for retirees.”
Tomlinson said the average retiree on a state pension makes about $28,000 a year. He said they can’t afford to pay an additional $1,200 or $2,000 a year in insurance premiums.
Gov. Nathan Deal’s budget proposal for the upcoming year included a 10 percent premium increase and other changes in the plan.
The dollar amount of the premium increase depends on the plan, the number of dependents, whether anyone on the plan smokes, and other factors. A 10 percent increase for most plans would have been in the range of $7 to $40 extra a month for most.
Because of the state’s long-running budget shortages, state employees have not had cost-of-living pay raises for several years, but their insurance premiums have gone steadily up, as have premiums in the private sector.
Tim Callahan of the Professional Association of Georgia Educators, the state’s largest teacher group, called it “a nasty surprise.”
“Someone dropped the ball,” Callahan said. “This is just another piece of very bad news [for teachers].”
Ralston said House leaders have been working to find ways to avoid massive premium increases and fill the hole.
“The obvious take is that somebody’s got to pay,” he said. “The reserves are gone. Somebody has got to pay and it’s either got to be the employer or the employee. We are going to try to find a solution, but it’s a daunting challenge right now.”
While state employees, teachers and retirees will almost certainly wind up with much higher premiums, Ralston said, “We are looking at every conceivable option to avoid that.”
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