State officials are projecting a massive shortfall in a few years for the health insurance program that covers 640,000 teachers, state employees, retirees and their dependents.
Lisa Walker, the chief financial officer for the state Department of Community Health, told the agency’s board that the program will have a surplus this fiscal year and next, which begins July 1. But for the budget year 2020, which starts in a little over two years, the State Health Benefit Plan, or SHBP, will run a $242 million shortfall if no changes are made.
Georgians on the plan have heard such projections before and fear it is a precursor to reducing benefits and raising premiums.
Earlier this month the DCH board increased premiums for teachers and state employees an average of 3.7 percent. Some state retirees will see their premiums increase 15 percent or more, while rates for others on more basic plans will decrease or remain the same.
Some Georgians buying private health insurance will likely see much larger premium hikes, but teacher, state employee and retiree groups are wary after years of battling the DCH and state lawmakers over their health plan. Now they wonder about largely unspecified cost savings the agency built into its forecasts.
John Palmer, a Cobb County educator and spokesman for the teacher, state employee and retiree group TRAGIC, said the organization is “very concerned about vague references to cost savings within the pharmacy contract.”
“We hope the DCH has not forgotten the lessons of their poor communication with members regarding plan changes in 2014 but are frustrated by the current lack of communication and transparency regarding proposed pharmacy changes,” Palmer said.
The DCH has projected massive shortfalls in the programs many times in the past. Back in 2015, the agency predicted a $301 million shortfall in the program for this year. With relatively modest rate increases and larger cost-cutting efforts, the agency now says the program will be $276 million in the black this year.
“For many years the DCH has reported current year SHBP surpluses but forecast large deficits three-five years down the road,” Palmer said. “If these forecasts were accurate, the SHBP would be buried under a huge deficit. Instead, our state is now running a $2 billion surplus.”
Even if no changes are made and the DCH’s projected $242 million shortfall came to fruition, the plan would have a $1.7 billion reserve, enough to pay close to half a year’s worth of bills. By contrast, Gov. Nathan Deal has record-high general fund state reserves at his disposal, but they would only pay to run the government for a month.
Plan members organized in early 2014 to create TRAGIC to protest changes in the plan after the DCH increased out-of-pocket costs and made other changes to the coverage. The group lobbied lawmakers and helped persuade state officials to add $114 million to the budget to reverse some of the changes.
The animosity goes back even further, though, with plan members accusing lawmakers of raiding the plan’s reserves to balance the state budget during the Great Recession. In recent years, they’ve also fought Deal and lawmakers over massive increases in premiums assessed to school districts to pay for the health insurance of noncertified school employees, such as school bus drivers and cafeteria workers.
Legislators argued that the state doesn’t provide health insurance to part-time workers, such as bus drivers. However, as The Atlanta Journal-Constitution reported in 2015, the SHBP covers part-time state legislators and even former lawmakers who now lobby the General Assembly.
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