The state’s employee health plan has a steeper financial hill to climb than previously forecast.
The Department of Community Health said Thursday that it will have to draw down reserves further, and make more benefit or premium changes, to shore up the State Health Benefit Plan, which covers about 700,000 employees, teachers, school personnel and retirees, as well as dependents.
Vince Harris, chief financial officer of DCH, told the agency’s board members that $74 million in additional benefit plan changes would have to be found. That’s on top of $72 million that the agency had already identified.
Already, members of the State Health Benefit Plan are expecting a 10 percent increase in their health insurance premiums beginning in January. The premium hike comes at a time when state employees and educators have recently gone without cost-of-living raises – and have had furloughs.
The new gap in the benefit plan, Harris said, was created partly because the federal government is giving the state $24 million less than anticipated in early retiree program funding under the health reform law.
The Affordable Care Act provides $5 billion nationally in financial assistance to employers to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare.
Georgia had been expecting $93 million for fiscal 2011 from the early retiree program, but will actually receive $69 million, Harris said. In addition, the state will receive a lower-than-expected amount in contributions from government units such as school systems that participate in the benefit plan.
To help bridge the gap, Harris said, the benefit plan’s surplus will be lowered to $85 million – only about 10 days’ worth of medical claims.
Harris said the agency and the governor’s budget officials are working on changes to the benefit plan to make up for the new projected shortfall. “Hopefully we’ll have some plan design changes we can all live with,’’ he said.
Tim Sweeney, senior health care analyst with the Georgia Budget and Policy Institute, said the new shortfall “reiterates the seriousness of the funding problems facing the State Health Benefit Plan.’’
“It shows the long-term danger of relying on temporary budget fixes to balance the state budget over the past few years,’’ Sweeney said.
A study committee of the Georgia House will look at the finances of the State Health Benefit Plan, with a report due by the end of the year.