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PEBP has generated a $43 million reserve by restricting coverage and increasing premiums

30 Jan 2012 11:43 PM | Deleted user
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.


  • 06 Feb 2012 10:53 AM | Susan Summers
    I can believe the massive amount PEBP has in reserves as I have paid into it by refusing necessary health care for an entire year! I cut out life saving medications and quit going to the doctor, even though I have been fighting cancer and a stroke. PEBP has effectively shortened my life span. Then again, try getting OUT of PEBP. It's impossible. Someone ought to look into this situation as it's obvious our state legislators are not and our Board of Regents is not!!!! Will someone out there please do something to remedy this aggregious afront to state and University employees??
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  • 06 Feb 2012 12:32 PM | Elizabeth Francis, UNR
    Like so many of my colleagues, I have had to delay medical care in the face of an appalling $1900 per year deductible since I am unable to pay this cost at a time when our salaries have been significantly reduced. PEBP needs to shape up and provide all state workers with the kind of health insurance coverage we have had in the past. A $43,000,000 surplus is the result of cynical disregard for the health of state workers, and needs to be distributed as soon as possible to all of us.
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