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For several years, legislators have been told of growing concern that Wyoming's group health insurance plan for state employees is heading for trouble.
The plan currently insures about 24,000 employees from the executive, judicial and legislative branches of state government, the University of Wyoming, the seven community colleges, and the Wyoming Community Development Authority.
The plan is self-funded, which means it covers claims from the revenues generated by the premiums collected. So it is essential that the plan attract younger, healthier participants to cover the claims of the high-cost participants.
Since the current plan does not cover any of the additional premium for family or dependent coverage, state employees who have another, less expensive option (such as a spouse's policy) will choose that option instead. This means that fewer younger participants remain in the state plan, resulting in a higher concentration of older, less healthy participants. Claims are higher, premiums must increase, and the plan spirals downward.
A Legislative Service Office Staff report issued in 2000 concluded that, to halt the plan's downward spiral, the state needed to contribute 100% of individual premiums and 50% of dependent coverage.
In the 2002 Budget Session, the Legislature chose ignore the legislative staff recommendations, and instead increased the state's contribution to individual premiums by amounts that were adequate to cover premium increases, but to include nothing toward the cost of dependent coverage.
Recognizing that the state plan is still in serious trouble and it will continue in its downward spiral until some dependent coverage is included, HB 69 was introduced. As a companion piece, HB 39 (with many of the same bill sponsors) was also introduced.
Under HB 69, the state would have paid 100% of the premium for individual coverage for state employees, and 50% of the additional premium for dependent coverage.
HB 39 would have added coverage for retired state employees, with the state paying up to $300 per month for premiums of retirees who choose to participate in the plan. Under current law, the only retired state employees who receive any insurance benefits are those who participated in the early retirement program, and they receive $215 toward their monthly premium.
It was estimated that HB 69 would cost the state about $27,000,000 in fiscal year 2004, while HB 39 would cost about $8,000,000 in the first year.
Governor Freudenthal, meanwhile, developed his own proposal for state employee insurance benefits, which includes state payment of 85% of the individual premium and 85% of the dependent premium.
Proponents of HB 69 argued that the bill was essential to keep the state employees insurance plan from total collapse in the near future. Supporters of HB 39 believed that retired state employees should be included in the state's insurance plan as a matter of fairness and decent treatment of retired employees.
Opponents argued against both bills primarily on the basis of their cost to the state.
The issue of state employees health insurance benefits was heard in the House Appropriations Committee several times. In addition to taking testimony on HB 39 and HB 6, the committee also heard from the Department of Administration and Information about Governor Freudenthal's plan.
In their third appearance before the committee, both bills were killed. The vote on HB 39 was 1-6, and the vote on HB 69 was 2-4. The general expectation was that the provisions included in HB 69, or some variation thereof, would be included in the supplemental budget bill.
Later in the session, the supplemental budget bill did end up with an appropriation for the state to pay 85% of the individual premium and 85% of the dependent premium for state employees.
The committee votes on HB 39 and HB 69 are listed below.
A YES vote on HB 39 means the representative supported extending insurance benefits to retired state employees. A YES vote on HB 69 means the representative supported increasing the amount the state contributes for individual and dependent insurance coverage for active employees.
A NO vote on HB 39 means the representative did not wish to extend insurance benefits to retired state employees. A NO vote on HB 69 means either that the representative did not support increasing the state contribution for individual and dependent insurance coverage for active employees, or that the representative wanted to wait and include it in the supplemental budget bill.
Following the demise of HB 39, HB 269 was introduced in another attempt to extend at least some health insurance benefits to retired state employees. HB 269 authorized a state contribution of up to $150 toward a retired employee's monthly premium.
It was estimated that this level of state contributions would cost the General Fund about $4 million a year.
HB 269 was defeated in the House Appropriations Committee. The vote was unrecorded, due to an odd legislative rule that does not require recording of committee votes that fail. Only those committee votes that pass a bill are recorded.
| House Appropriations Committee |
HB 39 1/27/03 |
HB 69 1/27/03 | |
| H 14 | Phil Nicholas (R) | No | No |
| H 25 | Alan Jones (R) | No | No |
| H 16 | Pete Jorgensen (D) | No | No |
| H 8 | Larry Meuli (R) | No | Yes |
| H 34 | Frank Philp (R) | No | No |
| H 11 | Wayne Reese (D) | Yes | Yes |
| H 33 | Harry Tipton (R) | No | No |