State employees insurance would be unchanged in proposal

State employee health insurance premiums and co-pays would remain mostly unchanged in 2015, under a proposal approved Thursday morning by a subcommittee of the State Employees' Insurance Board.

The vote, however, was not unanimous, and the plan still needs the approval of the full board, scheduled to meet on August 20.

"I think the board will be in conflict, and I think the vote will be right down the middle," said Paige Hebson, a field supervisor for the Alabama Department of Rehabilitation Services who serves as a representative of active state employees.

After discounts, state employees pay $18 a month for medical and dental coverage for individual policy holders, and $213 a month for families. SEIB officials initially projected a deficit next year of $27 million, due to a shrinking number of state employees and a rising number of retirees covered by the system. However, SEIB CEO William Ashmore said Thursday that estimate was conservative, while Hebson noted that medical increases projected in the past have been far lower than expected.

The board eventually settled on a projected deficit of about $17 million. Under the plan approved by the board, premiums for all but early retirees would stay the same. Early retirees with individual plans would pay $311 a month before discounts, an increase of $10; families would pay $573 a month before discounts. In both cases, the spouse of the retiree could not be on Medicare.

A $50 surcharge for spouses who use tobacco would be added as well, but otherwise co-pays would remain unchanged.

The deficit would be covered with five percent of the money in a retiree trust fund, and about $8 million from the $27 million in reserves held by the board.

The vote for the plan was 2-1, with Hebson and retiree representative Robert Pickett voting for it and Acting State Finance Director Bill Newton voting against it.

"I feel an obligation to balance this thing year in and year out and not operate at a loss," Newton said during the discussion of the proposal. "We're in for the long haul. If they start operating a program with more expenditures than revenues, we've got to double down on difficult choices in future years."

A number of co-pays were raised for state employees last year, and Hebson and Pickett, citing the overestimation of medical cost increases in the past, said state employees were being asked to absorb all the price increases.

"It's obvious to me we didn't need the reserves," Hebson said. "Employees didn't get their money back. We're making up the difference."

The Legislature last year kept state agency and offices' share of health insurance at $825 per contract, and lawmakers do not appear willing to alter that in the coming year. Senate President Pro Tem Del Marsh, R-Anniston, said earlier this month he believed the state employee workforce, reduced 11 percent since 2011, could be cut an additional nine percent. If that cut went into effect, revenues for the program would fall still further, due to the smaller number of active employees paying into the program.

Hebson said she was "tired of having the budget for the program balanced on the backs of state employees."

"We've overdone it the last two years," she said. "We haven't used a dime of reserves, and (state employees) have eaten it up."