General Fund budget could mean shortage for state employee health insurance program

Changes to state employee premiums will hinge on how the Legislature treats Gov. Kay Ivey’s proposed budget and the response of the board overseeing it. 

William Ashmore, the chief operating officer for the State Employees’ Insurance Board (SEIB), said at the board’s meeting on Tuesday that he would have liked to see the governor’s recommendation be slightly higher than what was proposed.

“But I will tell you – that come August – I will seriously recommend you look at some benefit changes, whether it’s premium structures, some copays, because you do not want to get caught in a situation next year or the year after where you’re looking at an 11% shortfall,” Ashmore said.

Ashmore said the board does not need to make up the shortfall in one year. But he said they should do so over the course of two or three years.

“So, what does that mean? Well, if the state is not paying for it, then the members will have to pay for it,” he said.

Sally Corley, chief operating officer for SEIB, said that in previous budget years, the budget included language saying the Legislature did not intend to increase out-of-pocket costs for employees or retirees. 

That language has been taken out of the budget Ivey sent to the Legislature.

“I think the signal from the governor’s office is, ‘we’re giving you a little bit lower rate than what you would like, but we’re allowing for you to make any changes,’” she said.

The board will have to await final budget numbers to know exactly what those changes could be, but they will discuss them in their August or September meeting.

Rep. Rex Reynolds, R-Huntsville, the chair of the House Ways and Means General Fund committee, said in a phone interview Tuesday that legislators do not intend to increase state employees’ health costs. Reynolds said he thinks the amount they received was adequate.

“So, we’re continuing to look at that. Certainly, we have time as both the General Fund and [Education Trust Fund] progress toward probably mid to late April timeframe. If we see adjustments need to be made, then I, for one, certainly hope we would address it,” Reynolds said.

Agencies across state government have struggled to attract employees in recent years. Sen. Greg Albritton, R-Atmore, the chair of the Senate Finance and Taxation General Fund committee, said in a phone interview Tuesday that  with fewer employees enrolling in the state employee’s health insurance program, fewer people are paying into the system.

“We are lower in state employees than we have been in decades, and we have higher population at higher demands,” Albritton said. “We’ve got to get more people coming to work for the state. So, we’re going to try to move that.”