State health premiums may see rise

JACKSON – Unless innovative ways are found to hold down health care costs, legislative leaders were told Monday, insurance premiums will increase for state employees and for retired state employees.
The cost of health insurance also would be increasing for the state.
Legislative leaders said Monday the increase would be difficult for state employees and for the government to absorb during the current economic downturn, which is causing a slowdown in tax collections.
The Mississippi government picks up the cost of health insurance for most state employees and teachers.
But dependent coverage is paid by the employee, and retirees pay the bulk of their coverage, though those insurance premium costs are partially subsidized by the state. More than 194,000 people are on the state plan.
Teresa Planch, the state insurance administrator, told members of the Legislative Budget Committee that the board overseeing the health insurance plan resisted increasing premiums this past year even though the program was losing money.
It is contemplating an 11 percent increase for the coming year, which would cost the state $56 million. For retirees and employees with dependent coverage, the total cost would be $35 million.
An 11 percent increase would increase costs for an average family by $62, to $625 per month.
The problem, said Planch, is that the continuing increase in health care costs is eating away at needed reserve funds in the state health insurance program.
Rita Wray, deputy executive director of the Department of Finance and Administration, which is the agency responsible for administering the program, said efforts are being made to find innovative ways to hold down the costs.
The Legislative Budget Committee heard the news Monday on the first day of hearings for next year’s budget. Through Thursday, state agency heads will present their budget requests for the upcoming legislative session.
A need to put an additional $50 million in health insurance is the last thing the legislative leaders wanted to hear as they deal with a dramatic drop in state revenue during the current national recession.
Legislative leaders and Gov. Haley Barbour have said they expect the budget situation to be dire for the next two years and numerous cuts are anticipated.
“We can’t get through the next two years doing things the way we have done them in the past,” said Senate Appropriations Committee Chair Alan Nunnelee, R-Tupelo. “We have to be looking at not how to do things better, but how to do things differently.”
Nunnelee cited a larger premium for smokers as one method to encourage smokers to quit and thus hold down the costs in the program.
During the tough economic times, an increase in premiums also would cause difficulties for state employees and retirees, said House Appropriations Committee Chairman Johnny Stringer, D-Montose.
“They can’t afford that,” Stringer said.

Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.

Bobby Harrison/NEMS Daily Journal