Another Fiscal Pothole

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In its 2012 session the General Assembly contended with the looming liabilities of the state employee pension plan. In the 2013 session, it may have to confront the looming liabilities of $900 million-a-year state employee health care program. Unless immediate steps are taken, reports Jeff Schapiro with the Times-Dispatch, the State Employees Health Insurance Fund (HIF) might have to “suspend payments to doctors and other health care providers, perhaps as early as April.”

If there’s any consolation, it’s that the shortfall is a tiny fraction of the one faced by the Virginia Retirement Fund. Schapiro boils down the mind-numbing, eyes-glaze-over actuarial issues as follows:

For at least three years, the insurance plan has paid out more than it has taken in. In 2011, the expense-to-revenue gap was $20 million, down from $50 million the previous year. But that was up sharply from the 2009 loss of $6 million.

Because employee contributions haven’t increased since 2008, the program has relied on existing funds and reserves to cover its bills. That’s a subsidy, of sorts, for employees, translating to roughly $74 per worker.

The state has done a pretty good job of holding the cost of medical care in line, but the average age of state employees is getting older — it’s about 48 now — and a higher percentage of the state workforce is seriously overweight or obese than is the population at large, according to the program’s 2011 annual report. Obesity is a major contributor to diabetes, heart disease and other chronic maladies.

Four years into an economic expansion, and unpleasant budgetary surprises are still popping up. Will they ever end? The good ol’ days of the 1990s, when the surprises were almost all positive, are long gone.

– JAB

3 Responses to Another Fiscal Pothole

  1. total health care benefits per employee = $12,709

    gotta be a story here..

    I was looking at MedicAid the other day and it’s about 6k per person.

  2. Larry – apples and oranges? I suspect we have a lot of state employees with family coverage. So it’s $12.7 K for more than one person versus $6 K per Medicaid recipient. Or am I missing something?

  3. no.. you might be right TMT… but if you are – this data is very limited in it’s usefulness… for comparisons… and only unto itself.

    basically it would be showing only trend data for itself now if it’s costs were equivalent to most other health care costs.

    I know our local school system decided last year to self-insure but to retain Anthem as the administrator/operator of the plan.

    Basically by doing that it appears that they went to a smaller pool and as a result that had higher than anticipated claims/losses and went 3 million in the hole – which is now a line-item on this years upcoming budget.

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