The State Employee Insurance Board (SEIB) Tuesday started discussions on possible increases in the costs of state employees’ health insurance.
“[SEIB] is basically trying to come up with a five-year plan that we can keep any rate increases to the member, as well as to the legislature, at a minimum,” said William Ashmore, the chief operating officer for the board.
The board’s Tuesday meeting was meant to come up with a proposed recommendation for funding the State Employees’ Health Insurance Plan (SEHIP), which currently faces a deficit. But after a discussion lasting over two hours, the board decided to postpone developing a proposal and instead opted for some time to evaluate options.
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Ashmore told board members ahead of the meeting that they didn’t necessarily have to make any decision Tuesday, considering the amount of information they were about to receive.
“But if you come back and you’re still not ready, we can move the August meeting to do so,” he said. “It’s more important that we do this right than to rush through it.”
SEIB has three options moving forward: increase revenue either through the General Fund or by raising employee premiums; reduce board expenses by increasing copays employees pay or cutting benefits; or use the board’s reserves from the carry-over fund and the Retiree Trust Fund.
General Fund budget could mean shortage for state employee health insurance program
Sally Corley, chief operating officer for SEIB, said that this was the first step in setting the rate and making decisions about insurance coverage.
“They’re beginning the process of looking at what revenues we have coming in, how the funding is going to look, and then how are we going to be able to set benefits that are still good benefits for state employees but also staying within our means,” Corley said.
The program is expected to run nearly $36 million in the red for the fiscal year 2024 at the projected expense growth rate. The program would have to increase monthly health insurance premiums by $20 a month each year to balance the budget by 2028.
State employees have a health insurance premium of $30 dollars per month. If such increases were to happen, individual employees’ monthly premiums would be $50 in 2024, $70 in 2025, $90 in 2026, $120 in 2027 and $140 in 2028.
The board could also increase co-pays for office visits and prescriptions or cut benefits. Ashmore said that a significant number of complaints are related to prescription co-pay costs.
Bill Poole, director of the Department of Finance and board member, said he understood that the state employee health insurance program needs more funding from the General Fund, but that would be unlikely without making concessions, like increasing premiums or changing benefits.
“I think the Legislature, to my judgment, the best chance you’re going to have to get that rate up is demonstrate a variety of actions and have a long-term plan,” said Poole, who served in the Alabama House of Representatives from 2010 to 2021. “I think that’s going to be the North Star.”
