State health plan about to go broke

The bleak assessment was delivered to the Legislature's Interim Finance Committee by Randy Waterman, acting risk manager for the state.

The news Thursday came as the committee authorized using the last of the health plan's reserve funds, $3.6 million, to pay medical bills incurred by state employees and their families.

Assemblyman John Marvel, R-Battle Mountain, asked Waterman if the transfer cleaned out the reserve.

"Absolutely," Waterman said. "This is flushing the fund."

Assemblywoman Chris Giunchigliani, D-Las Vegas, asked Waterman what his backup plan is if the Legislature doesn't approve an emergency $26 million loan proposed by Gov. Kenny Guinn.

"We don't have a backup plan," Waterman replied.

Guinn is preparing a 50-page bill to overhaul the program, including changing the Committee on Benefits, the five-member board that oversees the program.

But in the meantime, the loan is critical to solvency. The Legislature will have to pass a bill authorizing the loan, but no legislation has been introduced.

The state fund suffered problems in mid-1997 when a private company hired to pay the medical bills failed and closed its doors. Some state employees had to deal with collection agencies, and some medical providers suffered severe financial problems because the bills were not paid for several months. A new company was hired and and has tried to catch up with a huge backlog of paperwork.

Sen. Bill Raggio, R-Reno, said lawmakers are aware of the emergency situation and will take action quickly.

In addition to the loan, the amount the state pays each month to provide health insurance to employees will increase during the next two years. And employees are paying more to cover family members.

A 23.7 percent increase took effect for employee dependent care on Jan. 1, and future double-digit increases will be required to repay the loan and get the plan solvent.

With the increased premium and reduced benefits, Waterman anticipates the health care program will become solvent in fiscal 1999-2000 and show a $5 million surplus in 2000-2001.

About 41,000 state employees, retired employees and their dependents are covered by the plan.

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