medical coverage

Originally published March 7, 2011
Bill Cotterell: State workers' next ulcer: insurance
Bill Cotterell
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Bill Cotterell

While everyone has worried about changes in the Florida Retirement System, trouble has been brewing in another benefit plan vital to state employees.


The state's health insurance trust fund runs out of money in a few fiscal years, if nothing is done. Naturally, something will be done.

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To an outside observer, there appear to be three ways to dig out of an insurance deficit.

Gov. Rick Scott and Republican legislators could raise taxes and cover the gap (when elephants fly). The state could increase premiums paid by employees (which is in the works). Or they could cut back on covered benefits (always tempting).

Some combination of the latter two seems likely in the legislative session starting tomorrow. With layoffs looming and pension contributions pending — Scott wants 5 percent — it's going to be a doleful springtime, Tallahassee.

The state regularly conducts economic conferences to evaluate all sorts of finances, and there was a forecasting session on the state's self-insurance trust fund. It revised some numbers in light of recent insurance experience and the Federal Patient Protection and Affordable Health Care Act.

That's the one Scott calls "Obamacare." That's the one Senate President Mike Haridopolos has targeted in a resolution on the Senate's schedule this week, allowing Floridians to opt out.

"The outlook has worsened slightly overall as a result of these changes," said a summary of the estimating conference's findings. "For 2010-11, the projected ending balance has been reduced by $12.9 million, from $243.1 million to $230.2 million, while for 2011-12, the projected ending balance has been reduced by $5.5 million, from $99.6 million to $94.1 million."

At least that's still in the black. The reduction of the projected surplus is loose change in such a vast insurance operation.

But if current income and outflow continue, it gets worse. Fast.

"The outlook for subsequent years shows that expenses will exceed revenues by an amount that generates a negative cash flow of $333.9 million in 2012-13, $617.5 million in 2013-14 and $943.8 million in 2014-15," said the summary.

To put that into a little perspective: That first negative cash flow, the $333.9 million, is roughly equivalent to community colleges giving $152,000 book contracts to the next 2,200 Senate presidents to pen political primers. Add up the next two years' gap and you're approaching the amount the governor's old hospital company paid in Medicare fraud fines.

For state employees, premiums will go up and coverage options will go down, you can be sure. Health insurance already costs the state $2.12 billion in the current fiscal year, with the employee share accounting for only about $170 million of that.

Standard employee premiums are $50 a month for single coverage and $180 for family insurance. Last year's Legislature mandated that Senior Management, Selected Exempt, elected officials and others who used to get fully state-paid coverage would begin to pay one-sixth of the regular premium.

The reasons for the projected shortfalls won't surprise anyone who followed news accounts of the big health care debate in Congress last year. As everyone knows, medical costs are soaring, prescription drug prices are shooting up, old people are living longer.

Scott is a free-market business guy who believes in competition. We've heard him say that the best way to drive down costs of a thing is to give its consumers a stake in finding some cheaper options.

Starting in 2013, Scott wants to cap the state's share of insurance payments at $5,000 a year per employee. That would save about $330 million.

As state editor Paul Flemming reported last month, a $5,000 cap on the state's share would mean about 60,000 employees with family coverage would see their insurance costs rise from $2,160 a year to $9,920 for the same coverage. For employees with single coverage, who now pay $600 a year, their share would rise to $1,598 a year.

There will be a general revenue-estimating conference during the session, to revise the projected revenue shortage (now $3.6 billion) for everything the Legislature has to do. Once they get the revised estimate of how much money they have to work with, the House and Senate budget committees will decide how to spend it, in consultation with Scott.

As with the pensions, nobody knows for sure what they will do with state employee insurance. The only certainty is, employees aren't going to like it.

Get ready to make less again next year after the idiots in Tally cut our insurance. Every year they sh^t on State employees.

Has anyone heard if our insurance is a prime target this coming year? I am thinking of jumping on my wifes new plan.

Yep thats the rumor, the first year was the pension, now its the insurance.