Two weeks after being told their premiums would decline, more than 600,000 teachers, state employees, retirees and their dependents found out Thursday their health care plan faces a major shortfall that could have major consequences.
The State Health Benefit Plan is running a substantial surplus now, but Department of Community Health officials projected that it will amass a $42 million shortfall in 2016-2017 and a nearly $301 million deficit the next year.
That could mean higher premiums for some members or changes in the health benefits for those on the plan.
DCH Commissioner Clyde Reese noted that a recent audit made several suggestions for ways to save money, adding, “it will all be on the table for 2017.”
Those decisions would be made in 2016, an election year for all 236 state lawmakers, and possibly 2017, as the next gubernatorial race starts heating up.
The next clue about the direction the state will take will likely come in January, when Gov. Nathan Deal releases his budget proposal for the upcoming year.
John Palmer, a Cobb County school band director and spokesman for the health-care advocacy group TRAGIC, said his organization wasn’t surprised by the projected deficit because DCH has predicted them before.
In the recently completed fiscal year, the plan ran a $318 million surplus, and this year it’s predicted to see a $203 million surplus. Because of lower-than-expected medical costs, DCH officials announced that premiums for many teachers, employees and retirees would drop next year.
However, the program’s expenses are projected to rise nearly 30 percent over the next three years.
“This is projected today, and I am sure we will do things to address that before we actually get to those years,” Reese said. “In plan year ‘(20)17 we are going to look at some of the recommendations of the audit.
“The department has done very positive work in building up the financial stability of the plan so we are in a favorable position now.”
Members of TRAGIC are worried that situation may not last, at least for some of the members on the State Health Benefit Plan.
“With the recent political attacks on education and public agencies, teachers and state employees no longer trust the Department of Community Health or our state legislature to provide the benefits promised to teachers and state employees,” Palmer said. “Rather than continuing to squeeze more out of state employees, perhaps the DCH and the Georgia legislature should examine the reasons our costs for comparable insurance are higher and find more solutions than narrowing networks and telemedicine.”
State officials forced school districts to kick in an extra $100 million to pay for insurance for part-time workers like bus drivers and cafeteria workers.
TRAGIC members worry that one of the changes Deal and lawmakers will propose next year is for school districts to pay even more in the future for full-time so-called “non-certified” school staffers, such as bookkeepers. That would put more money into the plan but districts would likely oppose such increases, which could run into the hundreds of millions of dollars.
Reese said his agency will look at recommendations made by a recent AON Hewitt audit that showed Georgia teachers, state employees and retirees were paying more for their health care than workers covered by similar government-subsidized programs in Georgia and nearby states.
The recent state study listed several ways to cut costs for employees on the State Health Benefit Plan, including some that the DCH has tried or talked about. They included providing wellness incentives — which the benefit plan does — using telemedicine more, creating on-site health clinics and moving thousands of retirees off the plan and onto another program.
Another possibility, the study said, is an option Deal and lawmakers would probably rather not consider: putting more money into the plan so employees don’t have to pay so much.
Aon Hewitt also suggested two ways to bring down costs for the non-certified employees: force them to pay much more for their coverage, or design a new plan with fewer benefits.
The State Health Benefit Plan isn’t the only place health care costs are rising for the state. The DCH board was told Thursday that the agency would be asking Deal to include more than $200 million extra in spending in the mid-year 2016 budget and the budget for fiscal 2017, which begins July 1. Much of the increase is due to growing enrollment in Medicaid, the state-federal health care program for the poor and disabled, and rising costs for relatively new specialty drugs.