State's health-plan legislation won't work

Several months ago I wrote a column exposing the Teamster's Union's deceptive practices in pirating members from the State of Nevada Employee's Association, using its health insurance as bait. In the works at that time were proposed regulations to allow groups of 300 members of the state medical plan to opt out in favor of finding cheaper insurance from private sources.

Teamsters were claiming that SNEA members who would leave SNEA and join the Teamster's Union could soon opt out of the state system and join the Teamster's medical plan. However, they ceased this deception soon after being exposed in my column.

At that time, the Public Employees Benefits Board hadn't approved anyone to opt out of the state system and, even today, with PEBB's "Groups of 300 Administrative Regulations" in place, it's highly doubtful that those regulations will ever permit anyone to opt out for reasons I'll explain.

But again, the Teamsters are jumping the gun, raiding SNEA members, using bait-switch tactics claiming new members will soon be able to opt out and join their medical plan.

The problem with opting out is what is called "adverse selection." In one typical study, 56 percent of medical plan participants cost their plan $84 per year, 21 percent cost $566, 19 percent cost $2,693 and 4 percent cost $20,812 per year.

So it becomes obvious that groups of 300 opting out of the state medical plan, and who would be acceptable to a private plan, would be the younger, lower risk members who are the majority and who collectively pay most of the premiums. The older members, the ones costing the system far more money (the 4 percent in the above example) would be left behind in the state system. This would surely bankrupt the state medical system, which is slowly going broke without allowing any members to opt out.

Sen. Ann O'Connell once again demonstrated her lack of subject knowledge, ignoring "adverse selection" when she shepherded passage of the "Groups of 300" through her committee.

Now for the hookers: PEBB administrative regulations will not allow any group of 300 to opt out of the state system if such causes an increase of more than 5 percent in the premiums or contributions for the remaining participants in the program.

In view of "adverse selection," with the older, higher risk members stuck in the state system and having to pay increased premiums to make up for those opting out, the 5 percent ceiling will most assuredly be exceeded.

Additionally, PEBB can arbitrarily deny one "Group of 300" from opting out in favor of another group. Discriminatory. This is a prescription for endless lawsuits. Still another caveat is whether the current financial condition of the state program is such that the departure of a "Group of 300" will constitute a significantly negative impact on the program, or whether independent actuarial or other reviews obtained by the PEBB indicate that such a group departure will also cause a significant negative impact on the program.

In other words, there are dozens of caveats to be imposed at the sole discretion of PEBB which can, and will, prohibit any "Group of 300" from ever being approved to opt out. It is obvious to this old politician that the legislation was a lousy mistake and all of these "conditions," plus others that I don't have the space to write about, are barriers purposely erected to prevent implementation of the opt-out program, thus saving face. The odds are it ain't gonna happen and the Teamsters should know it!

Now, it should be obvious to all state employees that SNEA, through its huge affiliate, AFSCME, can also offer a medical plan superior to the state plan. But SNEA refuses to use that as bait to string along its members or to recruit new members because SNEA knows that opting out has little chance of ever becoming reality. The whole thing is unworkable. And yet, the Teamsters persist in using it to deceptively raid SNEA's membership.

This entire scenario reaffirms the fact that ACR-10, which is a current legislative study, is the only viable health insurance solution for Nevada's public employees. This study proposes that all Nevada public employees (state, county, city, fire, etc.) be incorporated into one huge pool for the purpose of obtaining the lowest-cost insurance with the best possible protection. A group of that size will be an attractive plum to the insurance industry.

SNEA is responsible for the ACR-10 study and is actively promoting it. Yes, it will probably be a few years away, knowing how slowly legislators adopt good programs. But it will come. It must come.

Bob Thomas is a past member of the Carson City School Board, the Nevada State Assembly and is author of the new book, "The Fail-Proof Enterprise -- A Success Model For Entrepreneurs."