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Lawmakers will not change state employee benefits this year

Inside the rotunda of the Idaho State Capitol building. Photo by Patrick Sweeney.

Inside the rotunda of the Idaho State Capitol building. Photo by Patrick Sweeney.

State employee benefits are not changing this year, but lawmakers will continue their search for a cheap health insurance option next year.

The Legislature last winter assigned an interim committee to investigate possible changes to employee insurance benefits. They’re looking for financial savings as medical plan costs increase 7 to 8 percent annually.

The committee’s final report and suggestions for the Legislature are due by the start of the coming session. But committee chairman Rep. Fred Wood, R-Burley, said the committee doesn’t have enough knowledge to recommend a specific plan for state employees. Instead, the committee will recommend that the Legislature craft a request for proposals to find an advisory firm to study health insurance options.

“I don’t imagine doing anything in the coming year or so,” Wood said. “Obviously, if you are going to make substantive changes, it will take a few years.”

The state relies heavily on its benefits to retain and attract employees. The wages for state positions have long trailed wages in the private market, prompting state workers to leave for better-paying jobs. The Legislature’s Joint Finance Appropriations Committee commissioned a report to study the trend in 2013 and found that 25 percent of the state’s employees planned to leave their position within two years. They cited low pay as the No. 1 reason.

The pay discrepancy has increased since the report.  Idaho paid its employees 7 percent below market wages in 2014, but is expected to pay 16 percent below market wages in 2017, according to the Idaho Legislature Office of Performance Evaluation.

The Office of Performance Evaluation said that benefits for Idaho state workers are better than the average benefits found in the public market, and lawmakers see that as one way to stem the departures.

But Idaho is having a hard time affording its insurance plan.

“I believe that since we low-ball our state employees we need to have great benefits,” said Senator Robert Nonini, R-Coeur d’Alene. “We have pretty good benefits right now, but they are unaffordable.”

Robert Nonini

Sen. Robert Nonini

The state uses a fully insured insurance plan managed through Blue Cross of Idaho. Changes mandated by the Affordable Care Act and increasing prescription costs have raised the cost of the insurance plan from $170.6 million in fiscal year 2010 to $236.3 million in fiscal year 2016, according to Jennifer Pike, group insurance administrator for the State Department of Administration.

After listening to testimony from local governments and private businesses, many interim committee members said a self-funded insurance plan would give the state more flexibility in offering benefits and would save the state money. But they want to see additional research before making a decision. A self-funded plan also exposes the state to more risk, Pike said.

“I am a proponent of self funding, but am still a little cautious,” said Sen. Todd Lakey, R- Nampa. “The program we have now is a kind of hybrid. We get some of the benefits of self funding, but cap our risk at 110 percent (of planned expenses).”

The committee is recommending the Legislature hire a firm to advise lawmakers on the matter.

Rep. Robert Anderst

Rep. Robert Anderst

“It needs to be put on the table for a professional group to come in and comment on,” said “Rep. Robert Anderst, R-Nampa.

The RFP will ask for help identifying the benefits and costs of self-funded plans, and assess ways to lower risk, such as combining state employees  with the employees of school districts or local governments to create a bigger insurance pool. It will also look for other options that could save the state money, such as more traditional insurance plans, employee wellness programs, health savings accounts and limiting prescription drug expenses.

“My understanding is there is a lot of options and I don’t want the experts to feel that anything is off the table,” Wood said.

Wood didn’t have a timetable for the RFP, but hopes it can be posted this coming winter.

Sen. Todd Lakey

Sen. Todd Lakey

“I want to emphasize that our charge and our goal is to have good benefits for our employees – benefits that help us to attract talent and to retain good employees,” Lakey said. “We need to make sure that is kept in mind through any discussion of reform.”

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.