Thursday, Aug. 1, 2002 | 9:27 a.m.
CARSON CITY -- State employees can rest easy they won't be facing a 21 percent increase in premiums for their state health insurance or face the loss of major benefits starting in January.
The Legislature, in one of its final acts this morning, adopted a plan to pump an additional $18 million into the beleaguered system covering 55,000 workers, dependents and retirees, and ordered a study to see if the program might be more effective with a private company.
"This is fantastic," said John Yacenda of the Nevada Employees Association, the state workers' union. "It's going to eliminate the anxiety a lot of employees feel right now."
Yacenda, hired to work on insurance issues for the association, said this plan will stabilize the system until June 30, 2003. It was in danger of running out of money, he said.
Three years ago the Legislature and Gov. Kenny Guinn had to pour an extra $26 million into the system to keep it solvent. Since that time rates for dependent coverage have increased.
The system has been paying out more for medical care than anticipated, including money for 22 expensive organ transplants in the last 18 months.
There was also doubt whether the system could get through the first six months of 2003.
Yacenda commended Guinn for putting the issue on the special session agenda so a relief plan could be approved.
The Assembly, by a 42-0 vote, adopted a plan by Chris Giunchigliani, D-Las Vegas, that calls for state agencies, starting in October to increase their per-employee payments to the system. The premium now paid is $384 a month per worker who must pick up the cost of his or her dependents.
The new rate will go to $465 a month and agencies must find this money in their already tight budgets. Giunchigliani said this would "keep the system whole." Contributions per retiree will go from $217 a month to $263 by each agency.
Her amendment to a Senate bill prohibits the system from assessing any higher premium that would come out of the pockets of the employees, dependents or retirees.
Results of the study about privatizing the system must be reported to the 2003 Legislature. Yacenda said this plan gives his association time to work on a long-range solution, including the possibility of a private company taking over.
Giunchigliani said the board of directors of the Public Employees Benefit Program could tweak the system to make some changes but not eliminate such programs as dental and vision coverage.
Guinn had proposed an additional $12 million going into the system with the employees, their dependents and retirees paying $3 million during the six months starting in January.
But the Senate didn't like the idea of hitting the state workers with added costs for their insurance coverage. Sen. Mark Amodei, R-Carson City, whose district has the highest numbers of state workers, proposed that the state pay the full $15 million to get the system through the first six months of 2003.
In a key vote in the Senate committee, Amodei won his way by a 13-8 margin, handing Senate Majority Leader Bill Raggio, R-Reno a defeat. Raggio had championed the governor's bill, saying the Guinn plan "does a good thing" and that employees were happy with it.
Amodei, however, said the workers should not be required to pick up the added cost. The full Senate later unanimously agreed with the Amodei amendment.
But Giunchigliani convinced Amodei and the Senate to back off their amendment in favor of her plan that maintains the present benefits without a rate increase. The board of directors of the state Public Employees Benefit Program has been wrestling with options on how to meet the shortfall. There was talk about eliminating dental and vision coverage and raising the rates.
Forrest Thorne, executive director of the Public Employees Benefit Program told the Assembly Committee on Ways and Means the system has been examining reducing the choice of HMOs that are offered and moving to a true preferred provider system for dental, instead of allowing people to choose their own dentists.
The Legislature is not appropriating any more money for the system. It is telling the agencies they have to find the extra money in their budgets to cover the added costs.
About half of the $18 million will come from so-called non-general fund agencies. These are the agencies that are supported by federal funds or fees or other revenues. For instance the state Transportation Department receives most of its money from the federal government or from the gasoline tax.
The total cost to the state's general fund will be about $9 million, which will be added to the estimated $165 million shortfall. While this spending proposal carries the plan through next June 30, financial experts say it will need another $20 million in the next few years to build up its reserves that have dipped dangerously low.
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