NOTE: As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature. The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.
The most recent FIR
version (in HTML & Adobe PDF formats) is available on the Legislative
Website. The Adobe PDF version includes
all attachments, whereas the HTML version does not. Previously issued FIRs and attachments may be
obtained from the LFC in
SPONSOR: |
Rawson |
DATE TYPED: |
|
HB |
|
||
SHORT TITLE: |
Group Health Insurance for State Employees |
SB |
833/aSPAC |
||||
|
ANALYST: |
Geisler |
|||||
APPROPRIATION
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
Significant See Narrative |
Recurring |
OSF,
GF |
|
|
|
Significant See
Narrative |
Recurring |
PSIA |
(Parenthesis
( ) Indicate Expenditure Decreases)
New
Mexico Public School Insurance Authority (PSIA)
General
Services Department (GSD)
Retiree
Health Care Authority (RHCA)
SUMMARY
The Senate Public Affairs Committee amendment to Senate Bill 833 would exempt public employees from mandatory participation in their employer group medical plan if they can demonstrate satisfactory proof of health insurance coverage.
Note: the original fiscal impact of $35.4 million per year shown below assumed that all employees not currently participating in GSD and PSIA plans would sign up for coverage. With this amendment, allowing employees to “opt out” if they have health insurance elsewhere, the fiscal impact would be greatly reduced. For example, if you assume 75% of the employees that opt out do so because they have health benefit coverage elsewhere, the revised fiscal impact would be approximately $8.8 million per year in increased premiums for GSD and PSIA.
Synopsis
of Original Bill
Senate Bill 833 would require that all public
employees participate in their group medical plan at the individual coverage
level. Family coverage remains optional.
Significant
Issues
According to GSD, SB 833 would force some state employees to carry
coverage for themselves at a cost that may be higher than they are currently
paying under their spouse’s (or other family member’s) plan. The state share to cover the 4,882 employees
who are not currently covered under the state’s plan would cost between $9 and
$10 million a year.
If employees covered by PSIA were forced to
enroll in medical, GSD estimates an additional 11,000 employees would be
enrolled. Assuming the lowest premium plan were selected, GSD estimates the increased overall cost
of $26.4 million ($200 monthly premium x 11,000 employees x 12 months). The cost impact on other local public bodies
is unknown as they offer varying contribution amounts.
TECHNICAL ISSUES
It is unclear who will enforce the bill’s
provisions.
It is not clear to PSIA if the employees they
cover are subject to this bill. If not,
enrollment may decrease by the number of PSIA enrolled “public employee
spouses.” PSIA’s own staff
are
public employees but are eligible for PSIA benefits, not those through
RMD. This would necessitate a change in
PSIA’s statute to allow PSIA’s employees to enroll through RMD.
ALTERNATIVES
The bill could be
modified to allow exceptions for employees who are able to show documentation
of other coverage. Uninsured local
public bodies could be required to purchase health insurance.
OTHER SUBSTANTIVE ISSUES
According to GSD, the
state currently covers 17,959 out of 22,841 eligible employees under the
medical plan for an 81% participation level. Of the remaining 19%, it is not possible to
determine the number of uninsured. The
state’s average contribution rate toward premiums is 62%. It is likely that many non-participating
state employees are covered under their spouse’s medical plans at a lower cost
than the State of New Mexico plan. It
would be unpopular with these individuals to require them by law to pay a
larger amount than is currently required to be covered by health insurance.
According
to PSIA, eligible employees choose not to participate because (a) they can’t
afford the premium, (b) they have coverage elsewhere or (c) they think it is
unnecessary to have health insurance.
Approximated 70% of our eligible employees participate in the medical
plan.
GG/njw:yr