At almost the same time that University of Nevada, Las Vegas, faculty and staff were asking, repeatedly, at today's town hall meeting in Las Vegas if the Board of Regents would be taking up the prospect of a supplemental benefit for Nevada System for Higher Education faculty and staff
to offset the woefully inadequate coverage offered
under the current Public Employees' Benefits Program, the executive director of PEBP was telling an interim legislative committee in Carson City that it has accrued a breathtaking $43 million reserve.
This is deeply distressing news, particularly in light of the impact that the shift to a choice of either high-deductible catastrophic-only coverage or high-premium HMO coverage has had on NSHE faculty and staff. A survey of UNLV faculty and staff conducted in November
found the changes have led to a marked increase in UNLV staff either declining coverage outright, delaying care or skipping needed medications (especially among those making less than $50,000 per year, which is over half the campus workforce).
What is particularly galling about the news of the surplus is that the PEBP staff's own report to the Board
prepared for the most recent Board meeting in January, attributed over half of the reserve ($23.5 million) to "[d]ecreased self-funded claims expenses" (p. 109) –
this despite repeated claims made by the Board and staff in 2010, when they proposed converting the PPO to a high-deductible/ catastrophic-only model of "participant over-utilization." Equally galling is that most of the rest of the reserve is attributed to a claim of $20.5 million in "[h]igher beginning cash" at the start of the plan year, last July 1. (Another $5.3 million of the surplus is attributed to "[i]ncreases to HMO premiums.")
This means that the overcharging of participants clearly pre-dates the beginning of the new plan design, since PEBP was already running a hefty reserve in fiscal year 2011, precisely at the time the claims of "participant over-utilization" were being repeatedly raised at Board meetings.
PEBP is now sitting on a reserve that has accrued almost $1,200 per insured state worker in the last six months –
a time during which treatments have been skipped and a record number of employees have dropped off the plan. (This also puts the state in jeopardy of running afoul of new federal requirements, to take effect in 2014, that all individuals must be insured.) Keep in mind that the employer contribution for each employee will actually increase
in fiscal year 2013, so that the supposed good news of stable premiums for participants that the PEBP board
will consider at its March meeting
means PEBP would still be increasing
its revenue next year while continuing to offer sub-standard health coverage.
Finally, as for the PEBP staff's assertion at the hearing that the reduction in benefits paid is a consequence of "sheer luck"
and that insurance claims in the latter part of the current plan year will reduce reserves, this raises a puzzling question: Who performs the actuarial work there? After all, PEBP and PEBP alone has the full data on its participants' past utilization experience, and PEBP and PEBP alone designed the current plan. If their economic models in fact projected that claims would be lower in the first six months of plan year 2012, then why did they not project this hefty surplus? And if they are in fact running significantly ahead of their own expectations for cash on hand, then why in the world does a nonprofit, self-insured plan not adjust the rates accordingly and give not only participants but also the state a break on premiums for next year?
Or, of course, go back to offering decent medical coverage that we public service workers have been paying for, but clearly not receiving.