Meltdown seen in Nevada state worker insurance program

CARSON CITY, Nev. -- Claiming a state employees' insurance program is facing a meltdown and its overseers are "derelict in their duties," Nevada lawmakers called Tuesday for a complete overhaul of the system.

"We're just spending money like we're having a funky good time," Assembly Ways and Means Chairman Morse Arberry, D-Las Vegas, said during the Public Employees' Benefits Program budget hearing before Senate and Assembly budget committees.

The proposed insurance plan budget is more than $458 million for the next two fiscal years, with most of the funds coming from insurance premiums paid by government employees.

At issue are continually growing health care costs, aging populations on the state's insurance rolls, the state plan operating in the red and a lack of reserve funding.

Despite those problems, Sen. Bob Coffin, D-Las Vegas, said the system's directors don't seem to have a sense of urgency. He said that by functioning on their standard schedule and not holding emergency meetings, the board members were "derelict in their duties."

"If anyone's going to run the railroad, it should be (the Legislature)," Coffin said.

The overall fund operated at a financial loss of about $16.6 million during fiscal 2002. Even with an $18 million influx approved during a special legislative session in the fall, the fund will operate at a loss of more than $5 million this fiscal year, insurance program director Forrest "Woody" Thorne said.

Besides the fund losses, there has been a steady decline in money held for emergencies. The state plans to bolster the funding reserve with nearly $12 million over the course of the next two-year budget cycle.

The reserve is expected to contain $3.9 million at the end of this fiscal year, which represents less than a week's worth of medical claims.

Health care costs are continually on the rise, with an expected 20 percent increase in prescription drug costs in 2003 and both state-funded and private plans experiencing double-digit cost increases.

Thorne said the board of directors will examine options and compile a laundry list of ways for the program to save money.

Assembly Speaker Richard Perkins, D-Henderson, said that instead of continually increasing the amount the state is spending to fund the growing costs of health care, it should look at how much it can afford to spend, then determine how much and what types of health insurance it can offer.

"We're backing into this thing," the speaker said.