Progress being made in closing funding gap in state benefits program

State officials are working on how to close a shortfall of roughly $63 million for the health insurance plan that serves state workers and retirees.

Still, it’s a big improvement over a multiyear deficit of more than $800 million the plan originally faced -- prompting double-digit premium hikes and other widespread changes this year.

One of the biggest changes expected to help close the existing gap is a three-year plan requiring every public school district in the state to contribute hundreds of dollars more every month for each noncertificated employee, such as custodians. The move is expected to raise more than $150 million in fiscal 2013 alone.

That’s a significant amount of money districts will have to get from local property taxes, said Tim Sweeney, a health care analyst with the nonpartisan Georgia Budget and Policy Institute.

“People are paying for it no matter what,” Sweeney said.

The $3 billion health plan, which serves more than 675,000 people, has seen its reserves dwindle in recent years as legislators used those funds to fill holes in the state budget. Meanwhile, decreasing numbers of employees to help fund the plan, combined with additional costs for health care and a growing number of retirees, added to the problem.

Now, progress is being made.

"[The Georgia Department of Community Health] took active, fiscally responsible and fair actions to address the financial challenges the [benefit plan] faced," said Trudie Nacin, who oversees the plan for the agency. “The state’s insurance plan ... is on more solid financial footing."

Other steps to get there include creating a voluntary wellness program and shifting state workers’ children to PeachCare for Kids, the state’s health insurance program for children from low-income families.

This year’s new wellness option is expected to save nearly $29 million in 2013. The roughly 288,000 workers who opted for the program saw premiums increase 11 percent, compared with a 17 percent hike for those on a standard plan.

People who choose the wellness plan will undergo a health screening and assessment, and they must then meet individual goals to remain eligible.

“As employees become more involved in healthy behaviors, the plan should see a return on the initial investment in the wellness plans,” Nacin said.

Moving 22,000 children of state workers to PeachCare for Kids is expected to save $32 million in fiscal 2013. The program has lower premiums and is partially funded by the federal government. The savings fall short of the $64 million originally projected, with only half as many children as expected moving to PeachCare.

Other changes expected to save tens of millions of dollars include a new mail-order drug program, the elimination of coverage for bariatric weight-loss surgery, the end of vision coverage in the HMO plan and decreased reimbursement rates for out-of-network providers.

State officials say it is too early to speculate on what other cost-saving measures will be taken to close the existing gap, though any employee premium increases would not surpass 10 percent.

The benefit plan got into trouble in fiscal 2009 and fiscal 2010 when contributions to it from state agencies were lowered -- replaced by nearly $864 million from the reserve fund, according to a report by the Georgia Budget and Policy Institute.

School systems’ payments for noncertificated employees also fell more than $430 million short of their actual cost to the plan, the report shows. The Department of Education has stopped contributing money to the plan to fill in the gap, which it had done for years, Sweeney said.