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Health care fund nearly insolvent

By Gary Fineout 
7/31/2009 Health News Florida

The Florida fund that pays the health care bills for tens of thousands of state employees will become insolvent in two years unless something drastic is done, state economists say. Someone has to fix the fund, either the taxpayers or state workers, and a top state senator says it should not be the taxpayers.

It's time to end the free health-insurance perk that legislators and 26,000 state workers -- those who aren't part of the career-service system -- now receive, says State Sen. J.D. Alexander, a Lake Wales Republican and chairman of the Senate committee that oversees the state budget.

The Department of Management Services has concluded that the state would collect an extra $44.9 million a year if it charged all state employees the same amount for health insurance. Rank-and-file state workers pay $50 a month for standard individual coverage and $180 a month for family coverage. 

"Quite frankly, it’s time we have the same for legislators as everybody else,’’ Alexander said. 
 
Florida spent more than $1.6 billion in the past year to provide health care coverage to nearly 200,000 state workers and university employees. Taxpayers picked up most of the cost, with employees contributing $156.7 million in premiums. 

Confronted with a $6 billion budget deficit, lawmakers this past spring decided to cut salaries for many state employees by 2 percent instead of forcing all employees to pay health insurance premiums or raise prices for those employees who already pay. But Gov. Charlie Crist vetoed the pay cut. 

That same state budget used taxpayer money to help bolster the State Employees Health Insurance Trust Fund. State legislators agreed to increase the state share by 5 percent in May 2010 to keep the trust fund from slipping into insolvency by June 2011.
 
New estimates show that the fund will remain in the black until sometime during the state budget year that runs from July 2011 to June 2012. Projections show the deficit growing to $390 million by the summer of 2012 and then topping $600 million a year later.
 
Health-care costs grow at a rate far higher than inflation. In addition, state economists have factored in an additional $39.8 million over three years for a controversial new state law (SB 1122) that requires insurers to pay out-of-network doctors directly rather than sending a check to the patient.  There's also a requirement that insurers cover autism treatment as of 2010.

Doug Martin, legislative and communications director for the main union that represents state workers, contends that hiring freezes have hurt the trust fund because the state is not bringing in younger workers, who could help broaden the health-insurance pool. 

Martin says he's hearing from more rank-and-file career-service employees who have to pay premiums and who wonder why higher-paid state employees continue to get health insurance for free.

 “Right now the lowest paid workers in the state subsidize those who make the most,’’ Martin said. 
 
Career service workers earn an average of $34,508. Those who don't pay for health insurance earn more: "Select exempt"  employees earn an average of $53,486; senior management employees are paid an average of $109,407.
 
A review of salary data by Health News Florida earlier this year showed that more than 1,000 employees eligible for free insurance earn $100,000 a year or more. 

Alexander says that lawmakers need to act next spring instead of just waiting for the deficit to grow. He said he has already asked Senate staff to begin research on how the state health insurance plan could be changed. 

“I think the sooner we start talking about appropriate adjustments the better the product we will come up with,’’ said Alexander. “We need to look hard at our programs and come up with something that works better.’’ 

--Contact Tallahassee free-lance reporter Gary Fineout at this e-mail.