State Employee Health Insurance Programs Open to Local Government Employees

January 31, 2008		2008-R-0067
State Employee Health Insurance Programs Open to Local Government Employees

By: R. F. O’Neil, Research Assistant John Moran, Principal Analyst

You asked for a comparison of various states’ state employee health insurance programs that also cover municipal, school district, county, or other local public employees.

summary

This report covers 20 states that have a state employee health program that is, to varying degrees, open to local public employers and their employees. Some programs are open to all local employers and employees and others are open only to specific employers such as school districts.

Nineteen of the 20 states give local governments the option of joining the state plan. Only Georgia requires local participation (for teachers).

Most of the state programs either self-insure or offer a mix of self-insured and fully insured plans. Only Missouri and New York are exclusively fully insured. Eleven states have created a separate experience rating pool for the non-state employees, and nine place all the employees (state and local), retirees, and dependents into a single pool.

Officials from the various states could not provide savings figures for the municipalities and other local entities that have joined. Many noted

that it was not part of their duty to determine whether the municipalities are saving money by joining the state plan, but a number of officials thought that the local savings were probably significant.

In some cases joining the state plan was the difference between a town having employee insurance and not having it. A New Mexico official noted the most recent town to join its plan had only five employees, which would probably make purchasing insurance on its own cost prohibitive. That town is now part of a pool of 90,000 people. (See OLR Report 2008-R-0039 for details about the Massachusetts plan and one town’s expected savings.)

The state-by-state details are shown in Table 1 below.

*State and Program*	*Local* *Option*	*Self or Fully Insured*	*Year Program Started*	*Number of People Covered* *(both state and local)*	*Separate Rating Pool for Non-state* *Employees*	*Administering Agency*
Arkansas Employee Benefit Division	Yes (but only for public school employees and retirees)	Self	2003	125,000	Yes	Employee Benefits Division is part of Dept. of Finance and Administration
California California Public Employees Retirement System (CalPERS)	Yes	HMOs fully, PPOs self	1967	1.2 million	No	CalPERS
Delaware Statewide Benefits Office	Yes (but there is a one-year moratorium on any new municipal members)*	Self insured for medical, fully for dental	Sine 1980s	110,000	Yes	Statewide Benefits Committee approves plans, committee is part of Statewide Benefits Office, within the Office of Management and Budget
Florida Division of State Group Insurance	Yes (but no towns have joined; officials have received some feedback that the requirements are burdensome)	Self insured for one PPO, fully for five HMOs	Around 2000	400,000	Yes	Part of Dept. of Management Services
Georgia State Health Benefit Plan	Mandatory for teachers and retired teachers. Not available to other local public employees.	Most plans are self insured, one Kaiser HMO is fully	1979	689,000	No**	State Health Benefit Plan part of the Department of Community Health
Illinois Group Insurance Division	Yes; different plans available to different counties	Self	1990	425,488	Yes	A division in Dept. of Central Management Services
Kentucky Kentucky Employees Health Plan	Yes, specific rules about leaving	Self	2006	245,000	No	Department for Employee Insurance
Louisiana Office of Group Benefits	Yes, only local education employees allowed, (but a moratorium was recently instituted)	Self	1980	246,751	No	Office of Group Benefits is part of Division of Administration
Massachusetts Group Insurance Commission	Yes	HMOs fully insured, PPO and indemnity plans self	2007 (limited no. of town employees and retired teachers included previously in separate pool)	286,000	No, all new members will be in a single pool with state employees	Group Insurance Commission
Missouri Missouri Consolidated Health Care Plan	Yes	Fully	1992	121,000	Yes	Missouri Consolidated Health Care Plan
Nevada Public Employees Benefit Program	Yes	Most plans self, some HMOs fully insured	Since 1965 for teachers, other groups added later	39,273	Yes	Public Employees Benefits Board
New Jersey State Health Benefits Plan	Yes	Self	1964	Not available	Yes	Division of Pensions and Benefits
New Mexico State Agency Health Plan	Yes	Self	Mid 1980s	90,000	No	Risk Management Division of the General Service Department
New York New York State Health Insurance Plan	Yes	Fully	1958	1.2 million	Yes	Employees Benefits Division of the Dept. of Civil Service
North Carolina North Carolina State Health Plan	Yes, but only allows in public school teachers	Self	1982	641,000	No	North Carolina State Health Plan
South Carolina Employee Insurance Program	Yes	Self	1989 for counties; 1994 for municipalities	420,000	No	Part of Budget and Control Board
Tennessee Benefits Administration	Yes	Self	1990	267,000	Yes	Part of Dept. of Finance and Administration
Washington Public Employees Benefits Board	Yes	Some self, some fully	Mid 1970s	315,000	No	Public Employees Benefits Board is part of the Health Care Authority
West Virginia Public Employees Insurance Agency	Yes	Self	1988	220,000	Yes	Public Employees Insurance Agency
Wisconsin Group Insurance Board	Yes	HMOs fully, indemnity plan and drug plan self	1987	230,000	Yes	Group Insurance Board is part of the Department of Employee Trust Funds
The Delaware legislature is expected to consider whether to lift the moratorium sometime this year. *Will eventually move to separate pools in order to more clearly demonstrate employers’ OPEB liability.

Notes from Various States

Some states are in flux on whether to have state and local employees in one large experience pool or to have separate pools. The Georgia system, which has had active and retired teachers in the same pool with state employee for years, plans on gradually shifting to separate pools in order to more easily demonstrate the separate state and school district post-retirement liability for health insurance that the Governmental Accounting Standards Board (GASB) requires. On the other hand, Massachusetts historically had separate pools, one for state employees and retirees and another for retired teachers and a limited group of municipal employees and retirees. Now, under a new law, all town and school district employees joining the plan will be pooled with state employees. Eventually commonwealth officials expect to just have one pool.

Two states, Delaware and Louisiana, have enacted moratoria on local governments joining their systems. Delaware’s moratorium expires on June 30, 2008, unless the legislature extends it. Louisiana, which allows only local education employees into its system, established a moratorium in part because the state was paying 75% of the premium for school districts that join. The legislature is expected to revisit the issue this year.

As for whether to self insure or be fully insured, a number of states have chosen a mix of methods. For example, Wisconsin self insured for its indemnity plan because it could not find anyone to fully insure it at a reasonable cost and its members wanted an indemnity option. It also chose to self insure for a unified prescription drug plan that covers both of its employee pools because it expected significant savings. Yet it found fully insuring for its 16 HMO plans to be less expensive than self insuring. Some states put the contracts out to bid and compare the resulting bids against what they determine the cost would be if they self insured.

HEALTH PLAN Web Links

Arkansas

www.arkansas.gov/dfa/employee_benefits/ebd_index.html

California

www.calpers.ca.gov

Delaware

http://ben.omb.delaware.gov/default.shtml

Florida

http://dms.myflorida.com/human_resource_support/state_group_insurance/dsgi_webcenter

Georgia

http://dch.georgia.gov/00/channel_title/0,2094,31446711_32021041,00.html

Illinois