In testimony before the Senate Committee on State Affairs, on March 31, Ann Fuelberg, Executive Director of the Employees Retirement System, described the current status and prospective financial outlook of the Group Insurance Program for state and higher education employees and retirees.
As reported here earlier, the program is facing a deficit, as the cost of the benefits will exceed the amount of appropriated revenue during the remainder of the current biennium. The shortfall is driven largely by medical inflation, with hospital costs cited as especially problematic, according to Sen. Robert Duncan (R-Lubbock), who chairs the committee.
A contingency fund will be depleted soon, given current trends.
Consequently the ERS board of trustees will meet May 25 to consider a variety of "design changes" that will be needed, according to testimony. To make matters even more ominous, these prospective adjustments must be considered in addition to a long-term problem that looms for the next (2012-13) biennium. This projected deficit will be addressed during the Regular Session that begins in January.
Ms. Fuelberg pointed out that the board's May decision will be the result of extensive collaboration with employee and retiree groups in an online survey (shared here in a previous blog), requesting members to choose from a variety of options—none of which will be popular. She added that there were 48,000 responses to the survey. The presenter noted that ERS respondents tend to favor incremental increases in co-payments, rather than increases in deductibles, as a means to save the system revenue. She said there has been some discussion of potentially raising member co-payments by $10 for primary care physician appointments and $10 for specialist visits. Unfortunately, such a step would not be enough to make up the difference.
Co-payment levels have remained constant for several years. Another possibility, according to the panel's discussion, is to adjust the "flat-dollar" co-payment to reflect a percentage of the cost of physician services. Presumably if costs rise, co-payments would follow proportionately.
Action by the Legislature is required to make more fundamental changes in premium levels, dependent coverage, or eligibility for health insurance for prospective retirees. ERS is currently engaged in a number of pilot programs to determine their suitability for legislative consideration.
Ms. Fuelberg stated that the Caremark prescription drug mail program is working according to contracted expectations.
The ERS Web site is available here.
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