A state audit discloses the health insurance program for state employees is far too costly with far too little oversight.
State Auditor Mike Foley today released an audit of the state employee health insurance plan administered by Blue Cross and Blue Shield of Nebraska. Foley says poor plan design and insufficient administrative oversight have allowed costs to exceed all other public health insurance plans in Nebraska as well as state employee health plans in Nebraska’s neighboring states.
Foley, during a news conference, said steps can be taken immediately to bring down costs.
“Well, they’ve absolutely got to do a better job of tracking who’s in this plan,” Foley said. “We can’t have state employees quitting their jobs, going off to the private sector or wherever and continue to walk about with a Blue Cross card and a prescription drug card and getting coverage. That’s costing us half a million dollars. Right off the bat, we ought to be able to fix that.”
Costs have escalated since 1999; sharply up since 2005. By 2011, the annual cost of insurance under the program totaled $27,058 per employee, nearly $12,000 more than the national average, according to the audit. Family coverage is the highest of any state in the nation.
The state pays 79% of the total premium. The state employee pays the remaining 21%.
To drive home the point about the plan’s design, Foley said that if the state plan required a higher deductible be met before a state employee could use a co-pay, it could save millions. He pointed out that that is the practice at the University of Nebraska.
“If we just mirrored the university plan, just on that one section, that would save the state $9 million,” according to Foley. “So, there’s a lot of money here to be saved.”
The audit also found the state pays excessive administrative expenses, pays too much for catastrophic coverage and holds too high a cash reserve.
Foley said changes can be made administratively to reduce costs. He said the legislature might also be interested to review the audit and consider action.
Sen. Bob Krist of Omaha attended the news conference and said legislators likely will be interested in why the plan keeps $65 million in its cash reserve, a total far in excess of what is needed to cover expenses, according to the audit.
“We need to look at some of those things and take some legislative action,” Krist said.
The state employee health insurance plan is administered by the Department of Administrative Services. It covers approximately 29,000 state employees and their dependents.
For the full audit report, go to the State Auditor website.
AUDIO: State Auditor Mike Foley outlines audit of state employee health plan. [21 min.]